In: Accounting
Please answer these questions
1)Factors that affect E-centives decision to raise capital and list on Swiss Exchange's New Market?
(2) What contributes to E-centives decision not to list in the US?
(3) Advantages and disadvantages of using US GAAP?
(4) Preparation of its financial statements using Swiss accounting standards?
(5) Does E-centives appear to fit with the profile of New Market Company?
1)
Possible factors relevant in e-centives decision to raise capital
and list on the Swiss Exchange s New Market:
a. Ease of raising capital :The Swiss Exchange s New Market has
simple listing requirements designed to appeal to small companies.
The contrast with the complex, detailed listing and reporting
requirements in the United States is striking
b. Availability of capital :Switzerland has a large, well-developed
capital market.
c. Reputation of the exchange :The Swiss Exchange is well known for
providing a high quality, efficient trading environment.
2)
Possible drawbacks to not raising capital in the U.S. public
markets.
a. Lack of access to the largest pool of investment capital in the
world.
b. Lack of following by U.S. investment analysts, and lack of
access to individual U.S. investors.
c. Trading volume on the Swiss Exchange New Market is much smaller
than on the U.S. exchanges.
d. Listing in Switzerland does little to establish the reputation
or raise the profile of e-centives in the United States.
e. The degree to which (mostly European) investors in the New
Market would be interested in a struggling U.S. start-up certainly
can be questioned.
3)
Advantages and disadvantages to e-centives of using U.S.
GAAP.
Advantages:
U.S. accounting standards are highly credible and well known, which
is important to a new company seeking investment capital, and would
be much more familiar to the company’s management, outside
auditors, and investors domiciled in the United States than any
other set of standards.
Use of U.S. GAAP would eliminate some suspicions of the company
trying to put something over on investors by using some other set
of GAAP, and U.S. GAAP is accepted explicitly by the Swiss
Exchange.
Disadvantages: U.S.