Page 96 - Initial Public Offering - An Introduction to IPO on Wall Street

Earnings are not the only thing that affects the opinion of a business by the public. Even when
a business goes public, it should try to preserve (or enhance) the features it used to provide
before it went public. Firms should accept the following after the IPO:

 Is the business showing a steady or growing rate of growth that is sufficiently high to
lure/appease investors? A business must keep growing at a pace acceptable to investors; its
share value will be primarily ascertained by the earnings potential of the company
 Are the goods or services of the organization easily identifiable and of interest to the public
who consume and invest? To investors, consumers, and the community, the business should
project a positive picture. This is significant because the public's attitude will influence the
value of the stock. There is today, for instance, a rising interest in corporate social
responsibility, including topics of climate change and sustainability. To resolve such issues,
businesses need a plan
 Is leadership competent and dedicated? Management plays a vital role in the success of a
business; it is, therefore, vital that management remains creative, dedicated, and competent

4.7.2 Maintain Regulatory Compliance

Understand Reporting Requirements under Sarbanes-Oxley

In the second annual report submitted following the IPO under Section 302 of Sarbanes-Oxley,
the leadership of a newly-public corporation is expected to deliver a report evaluating the
efficacy of the firm's internal control over financial reporting.

Section 404 of Sarbanes Oxley also needs an independent licensed public accounting firm of a
corporation to provide an affidavit report on the operational performance of the internal
regulation of financial reporting by the organization. As of the same day, the independent
accounting firm must also give its judgment on the financial reports of a corporation.

EGCs are excluded from the obligation to undergo an internal audit of financial reporting
control. It should be noted that this exception only extends to the provisions of the internal
control review (Sarbanes-Oxley Section 404(b)).

EGCs are not excluded from the Management Obligation to Determine Internal Financial
Reporting Measures (Sarbanes Oxley Section 404(a)) starting with the second annual report of
the organization. Nonetheless, an organization must carry out significant work to enforce the
required procedures, record the framework of internal control over critical processes, review
control design, fix any shortcomings found and evaluate the operation of controls. Such
mechanisms can be both expensive and difficult.

Comply with XBRL Reporting

All-SEC registrants have been mandated since 2011 to provide the SEC with their financial
reports and financial report timelines and use eXtensible Business Reporting Language
(XBRL) to publish them on their business websites in an immersive data format. For several
non-public entities, this will be a new undertaking and each reporting cycle will require extra
work from the finance department.

Provide Timely Disclosure of Material Information

All material details (except if there is a valid excuse for not doing so), both beneficial and
negative, should be published by a public corporation as soon as possible. Data that is typically

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