Clearly the dotcom bust (and closely-following recessions and wars) explained the immediate drop in IPOs. But those are cyclical matters. Why they haven't come back 10 years later is what requires some structural explanation. SOX is both proximate in time and plausible as a mechanism, on the 10-year scale.

Never mind the crazy IPO levels of bubble years 1999-2000. Why can't we get back to the modest 100-200 IPOs a year of the early 1990s?

SOX is a pain in the ass but it's hardly relevant. If you're planing a multi-100-million dollar IPO, having to do more accounting work isn't your primary or secondary driver.

Higher accounting costs and legal risks every year of being a public company doesn't make being a public company less attractive? Companies don't care about expenses?

They're not irrelevant, but we're seeing a margin much bigger than they could account for. If there were companies that today could exit with 1990s-style $500m IPOs, I don't think they would walk away from them because of SOX. They're not having those IPOs because there are very few companies today that could convince investors to pay $500m for their stock.

Those who do have a business model, outlook, and revenues that makes them attractive, like Google, can and do still IPO successfully, but there aren't many of them.

I agree that SOX alone is not enough to explain the dearth of IPOs. A least for 2008-2010, the housing/financial crash seems a much bigger culprit.

At the margin, though, SOX's costs cause private companies to delay going public, and provide a relative advantage to older/larger/already-public companies -- acquirers -- for whom compliance costs are proportionately smaller.

And since the cycle of IPOs depends on emulating prior successes, even a small initial effect could depress the follow-on rate for years.

Google is sui generis, the most successful venture-backed company of the past 30 years. If being 'like Google' is the yardstick to IPO, the system is seriously broken.

We're talking about people making a decision to go public or not. Those legal risks were there anyways (it's illegal to defraud shareholders, even by accident), and if you're raising an IPO you're gonna be skyrocketing your accounting and other overhead costs anyways.

Your single-minded obsession with SOX is missing about a million other general and business-specific factors that would go into this decision, many of which represent a much higher dollar figure than sarbox compliance.

Heck, the costs of actually executing the IPO probably dwarf typical sarbox compliance costs (this statistic totally made up but plausible).