Strayer Univeristy Impact of The Sarbanes Oxley Decision to Go Public Paper

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Strayer Univeristy

Description

Assume that you are a CEO of a medium-sized company that needs a significant influx of cash for several expansion projects. As the CEO, you must determine whether your company should remain private or go public. Some companies postpone going public due to the unpredictability of economic and market conditions. Consider the ramifications of both alternatives. Construct an argument for and against going public. Before providing your response, review the guidelines and regulations associated with going public by reading Information for Small Businesses.

Use the Internet to research Sarbanes Oxley Act—Summary of Key Provisions.

Instructions

Write a 4–5 page paper in which you:

  1. Outline three ways in which a medium-sized private company may benefit from going public, providing a rationale for each.
  2. Create an argument that the same goals may be achieved if the company remains a privately held entity. Provide support for the argument.
  3. Suggest four leading financial ratios that will be evaluated and how each will affect the company’s decision to obtain expansion funds. Determine whether the results of the ratios would alter the decision to go public.
  4. By researching the results of SOX compliance surveys, assess the financial effect that SOX might have on a company if it decides to go public. Considering the impact of SOX compliance, take a position as to whether your company can overcome the challenges posed by SOX compliance if the decision is to go public. Based on research, support the decision by identifying the potential advantages and disadvantages that SOX may have on the company. Provide specific examples.
  5. Make a recommendation as the CEO regarding the alternative (i.e., going public or staying private) that will best support the company’s expansion goals. Support the position.
  6. Use at least four quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.

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Explanation & Answer

Attached.

Running head: IMPACT OF SARBANES-OXLEY ACT ON DECISION TO GO PUBLIC

Impact of Sarbanes-Oxley Decision to go Public
Institution Affiliation
Date

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IMPACT OF SARBANES-OXLEY ACT ON DECISION TO GO PUBLIC

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Benefits of a Medium-Size Private Company Going Public
Several benefits accrue to a medium-size company when it chooses to go public. After
considering that they meet the Sarbanes-Oxley Act, the first benefit is that the company has
improved access to capital. Immediately the company goes public; it invites Initial Public
Offering where investors buy shares, or else, the company sells its stocks to the general public.
The IPO investors only seek an appreciation of their investment, which is mainly made through
dividends. The benefit of an IPO is that it does not need to be repaid, which means that the
company can retain the capital (Takahashi & Okada, 2018). It is also possible that the company
may obtain capital quickly in the future through public debt offerings and new stock offerings.
Secondly, the medium-sized company has increased public awareness of its activities and
operations. Since it is a public company, it is expected to print information in newspapers, and
this generates attention from the public. This, in turn, leads to new opportunities for the company
as well as new customers. New customers mean that the company will have more capital and
earnings as well. Local and international customers will cause the company to grow and
maximize globalization; it will start to operate on an international level. Additionally, the
company will have improved credibility with its investors, suppliers, lenders, among others, due
to improved credit status (Takahashi & Okada, 2018).
Lastly, the company is in a position of using their stock in creative incentive packages for
their staff and the manag...


Anonymous
Really useful study material!

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