China is very likely to become Nasdaq's biggest source of non-U.S. listings by the end of 2007, according to NASDAQ Stock Market vice chairman Michael Oxley.
Although Oxley declined to give the specific number, there must be at least 23 more Chinese firms to be listed by year end for China to catch up with Israel, Nasdaq's current biggest source of non-U.S. listings, who has about 70 listed companies on the market.
Forty-seven Chinese companies have been listed on Nasdaq so far, with 13listed in 2007 and nine in 2006, said Oxley, best known as a co-author of the Sarbanes-Oxley Act, which tightened U.S. rules on financial reporting and governance.
The act is in response to a string of corporate scandals, such as Enron. However, some companies complained the strict rules resulted in enormous auditing expense.
Oxley said the measures haven't discouraged Chinese companies from listing on Nasdaq, though its president, Bob Greifeld, said last year they were hindering efforts to attract international listings.
"It's a combination of accessing the most liquid and visible market in the world and, I guess you could call it, the prestige of listing with a market that has such high standards," Oxley said.
"I think they aspire to play in the big leagues, and they know they have to meet these requirements to do so," he said, "so instead of whining or backing off, they have made a determination that this is a competitive advantage to them in the marketplace to say they have made a decision to meet these higher standards."
Furthermore, the auditing measures have been modified from one same standard for all companies to different standards based on the company size and the risk that a company is able to cause, he said.
"It has more flexibility and can significantly reduce auditing expense for small companies," he said, "it will help Nasdaq attract more listings, including those in China," he said.
Those on Nasdaq include Internet search engine Baidu.com Inc., Web portals Sina.com Corp. and Sohu.com Inc., and Suntech Power Holdings Ltd., a maker of solar power equipment.
To attract more Chinese listings, Nasdaq is applying to open a representative office in Beijing.
