IPOs Exhibit Material Weakness

From 2011 to 2014, the number of IPOs on the NYSE has more than doubled, from 128 to 293. However, from a financial reporting view, the IPOs have grown weaker. The percentage of IPOs that reported material weaknesses, or deficiencies, in financial reporting grew from 23 percent in 2011 to 31 percent for 2015 IPOs through September. One reason may be the JOBS Act, which allows smaller companies to raise external capital. Staggering 88 percent of IPOs with less than $500 million in revenue reported material weaknesses.