Notation encadrée, notation critiquée, mais notation responsabilisée ! Présentation des articles 10 et 11 de la loi n°2010-1249 du 22 octobre 2010 de régulation bancaire et financière

Mettant fin au statu quo qui régnait en matière de notation de crédit, de nouvelles dispositions ont été insérées dans le Code monétaire et financier pour placer les agences de notation de crédit sous surveillance. Sur le fondement du règlement européen n°1060/2009 du 16 septembre 2009, l’AMF se voit tout d’abord confier la mission d’enregistrer ces agences. Ensuite, la compétence règlementaire, d’enquête et de sanctions de l’autorité boursière française se trouve élargie aux activités des agences de notation. Enfin, des mesures définissant un régime de responsabilité applicable aux agences de notation ont été introduites dans le corpus normatif français. En dépit de critiques certaines, l’envahissement de la sphère financière par le rating imposait un signal fort à destination des agences de notation de crédit.

Do EU direct payments to beef producers belong in the 'blue box'?

In the Uruguay Round Agreement on Agriculture, so-called 'blue box' support measures were exempted from reduction commitments, provided they were delivered under 'production-limiting' programs. Although classified as 'blue box', the EU system of direct payments (DP) to beef farmers imposes 'claim-limiting' restrictions rather than 'production-limiting' restrictions, allowing farmers to keep additional animals over and above the number upon which they are eligible to claim DP. The present paper provides empirical evidence that EU direct payments capitalise into the market prices of male calves and young steers in Ireland. It is also likely that DP capitalises into the prices of beef cows and heifers. Given this capitalisation process, some farmers can obtain 'capitalised' DP on animals produced over and above the 'claim-limiting' restrictions, by selling these animals through auction markets. Thus, 'capitalised' DP probably encourages production over and above the limiting measures.

The inflation hedging characteristics of US and UK investments: a multi-factor error correction approach

Historic analysis of the inflation hedging properties of stocks produced anomalous results, with equities often appearing to offer a perverse hedge against inflation. This has been attributed to the impact of real and monetary shocks to the economy, which influence both inflation and asset returns. It has been argued that real estate should provide a better hedge: however, empirical results have been mixed. This paper explores the relationship between commercial real estate returns (from both private and public markets) and economic, fiscal and monetary factors and inflation for US and UK markets. Comparative analysis of general equity and small capitalisation stock returns in both markets is carried out. Inflation is subdivided into expected and unexpected components using different estimation techniques. The analyses are undertaken using long-run error correction techniques. In the long-run, once real and monetary variables are included, asset returns are positively linked to anticipated inflation but not to inflation shocks. Adjustment processes are, however, gradual and not within period. Real estate returns, particularly direct market returns, exhibit characteristics that differ from equities.

Discounted cash flow: accounting for uncertainty

Valuation is the process of estimating price. The methods used to determine value attempt to model the thought processes of the market and thus estimate price by reference to observed historic data. This can be done using either an explicit model, that models the worth calculation of the most likely bidder, or an implicit model, that that uses historic data suitably adjusted as a short cut to determine value by reference to previous similar sales. The former is generally referred to as the Discounted Cash Flow (DCF) model and the latter as the capitalisation (or All Risk Yield) model. However, regardless of the technique used, the valuation will be affected by uncertainties. Uncertainty in the comparable data available; uncertainty in the current and future market conditions and uncertainty in the specific inputs for the subject property. These input uncertainties will translate into an uncertainty with the output figure, the estimate of price. In a previous paper, we have considered the way in which uncertainty is allowed for in the capitalisation model in the UK. In this paper, we extend the analysis to look at the way in which uncertainty can be incorporated into the explicit DCF model. This is done by recognising that the input variables are uncertain and will have a probability distribution pertaining to each of them. Thus buy utilising a probability-based valuation model (using Crystal Ball) it is possible to incorporate uncertainty into the analysis and address the shortcomings of the current model. Although the capitalisation model is discussed, the paper concentrates upon the application of Crystal Ball to the Discounted Cash Flow approach.

Explaining deviations from NAV in UK property companies: rationality and sentimentality

One of the most vexing issues for analysts and managers of property companies across Europe has been the existence and persistence of deviations of Net Asset Values of property companies from their market capitalisation. The issue has clear links to similar discounts and premiums in closed-end funds. The closed end fund puzzle is regarded as an important unsolved problem in financial economics undermining theories of market efficiency and the Law of One Price. Consequently, it has generated a huge body of research. Although it can be tempting to focus on the particular inefficiencies of real estate markets in attempting to explain deviations from NAV, the closed end fund discount puzzle indicates that divergences between underlying asset values and market capitalisation are not a ‘pure’ real estate phenomenon. When examining potential explanations, two recurring factors stand out in the closed end fund literature as often undermining the economic rationale for a discount – the existence of premiums and cross-sectional and periodic fluctuations in the level of discount/premium. These need to be borne in mind when considering potential explanations for real estate markets. There are two approaches to investigating the discount to net asset value in closed-end funds: the ‘rational’ approach and the ‘noise trader’ or ‘sentiment’ approach. The ‘rational’ approach hypothesizes the discount to net asset value as being the result of company specific factors relating to such factors as management quality, tax liability and the type of stocks held by the fund. Despite the intuitive appeal of the ‘rational’ approach to closed-end fund discounts the studies have not successfully explained the variance in closed-end fund discounts or why the discount to net asset value in closed-end funds varies so much over time. The variation over time in the average sector discount is not only a feature of closed-end funds but also property companies. This paper analyses changes in the deviations from NAV for UK property companies between 2000 and 2003. The paper present a new way to study the phenomenon ‘cleaning’ the gearing effect by introducing a new way of calculating the discount itself. We call it “ungeared discount”. It is calculated by assuming that a firm issues new equity to repurchase outstanding debt without any variation on asset side. In this way discount does not depend on an accounting effect and the analysis should better explain the effect of other independent variables.

Data uncertainty in real estate forecasting

The rapid expansion of the TMT sector in the late 1990s and more recent growing regulatory and corporate focus on business continuity and security have raised the profile of data centres. Data centres offer a unique blend of occupational, physical and technological characteristics compared to conventional real estate assets. Limited trading and heterogeneity of data centres also causes higher levels of appraisal uncertainty. In practice, the application of conventional discounted cash flow approaches requires information about a wide range of inputs that is difficult to derive from limited market signals or estimate analytically. This paper outlines an approach that uses pricing signals from similar traded cash flows is proposed. Based upon ‘the law of one price’, the method draws upon the premise that two identical future cash flows must have the same value now. Given the difficulties of estimating exit values, an alternative is that the expected cash flows of data centre are analysed over the life cycle of the building, with corporate bond yields used to provide a proxy for the appropriate discount rates for lease income. Since liabilities are quite diverse, a number of proxies are suggested as discount and capitalisation rates including indexed-linked, fixed interest and zero-coupon bonds. Although there are rarely assets that have identical cash flows and some approximation is necessary, the level of appraiser subjectivity is dramatically reduced.

The appraisal of data centres: deconstructing the cash flow

This paper analyses the appraisal of a specialized form of real estate - data centres - that has a unique blend of locational, physical and technological characteristics that differentiate it from conventional real estate assets. Market immaturity, limited trading and a lack of pricing signals enhance levels of appraisal uncertainty and disagreement relative to conventional real estate assets. Given the problems of applying standard discounted cash flow, an approach to appraisal is proposed that uses pricing signals from traded cash flows that are similar to the cash flows generated from data centres. Based upon ‘the law of one price’, it is assumed that two assets that are expected to generate identical cash flows in the future must have the same value now. It is suggested that the expected cash flow of assets should be analysed over the life cycle of the building. Corporate bond yields are used to provide a proxy for the appropriate discount rates for lease income. Since liabilities are quite diverse, a number of proxies are suggested as discount and capitalisation rates including indexed-linked, fixed interest and zero-coupon bonds.

Valuation and arbitrage

The use of discounted cash flow (DCF) methods in investment valuation and appraisal is argued by many academics as being rational and more rigorous than the traditional capitalisation model. However those advocates of DCF should be cautious in their claims for rationality. The various DCF models all rely upon an all-encompassing equated yield (IRR) within the calculation. This paper will argue that this is a simplification of the risk perception which the investor places on the income profile from property. In determining the long term capital value of a property an 'average' DCF method will produce the 'correct' price, however, the individual short term values of each cash-flow may differ significantly. In the UK property market today, where we are facing a period in which prices are not expected to rise generally at the same rate or with such persistence as hitherto, investors and tenants are increasingly concerned with the down side implications of rental growth and investors may indeed be interested in trading property over a shorter investment horizon than they had originally planned. The purpose of this paper is therefore to bring to the analysis a rigorous framework which can be used to analyse the constituent cash flows within the freehold valuation. We show that the arbitrage analysis lends itself to segregating the capital value of the cash flows in a way which is more appropriate for financial investors

Energy performance ratings and house prices in Wales: an empirical study

This paper investigates the price effect of EPC ratings on the residential dwelling prices in Wales. It examines the capitalisation of energy efficiency ratings into house prices using two approaches. The first adopts a cross-sectional framework to investigate the effect of EPC band (and EPC rating) on a large sample of dwelling transactions. The second approach is based on a repeat-sales methodology to examine the impact of EPC band and rating on house price appreciation. The results show that, controlling for other price influencing dwelling characteristics, EPC band does affect house prices. This observed influence of EPC on price may not be a result of energy performance alone; the effect may be due to non-energy related benefits associated with certain types, specifications and ages of dwellings or there may be unobserved quality differences unrelated to energy performance such as better quality fittings and materials. An analysis of the private rental segment reveals that, in contrast to the general market, low-EPC rated properties were not traded at a significant discount, suggesting different implicit prices of potential energy savings for landlords and owner-occupiers.

Energy performance ratings and house prices in Wales: an empirical study

This paper investigates the effect of Energy Performance Certificate (EPC) ratings on residential prices in Wales. Drawing on a sample of approximately 192,000 transactions, the capitalisation of energy efficiency ratings into house prices is investigated using two approaches. The first adopts a cross-sectional framework to investigate the effect of EPC rating on price. The second approach applies a repeat-sales methodology to investigate the impact of EPC rating on house price appreciation. Statistically significant positive price premiums are estimated for dwellings in EPC bands A/B (12.8%) and C (3.5%) compared to houses in band D. For dwellings in band E (−3.6%) and F (−6.5%) there are statistically significant discounts. Such effects may not be the result of energy performance alone. In addition to energy cost differences, the price effect may be due to additional benefits of energy efficient features. An analysis of the private rental segment reveals that, in contrast to the general market, low-EPC rated dwellings were not traded at a significant discount. This suggests different implicit prices of potential energy savings for landlords and owner-occupiers.

Processes and variations in language economisation

This article analyses the processes of reducing language in textchats produced by non-native speakers of English. We propose that forms are reduced because of their high frequency and because of the discourse context. A wide variety of processes are attested in the literature, and we find different forms of clippings in our data, including mixtures of different clippings, homophone respellings, phonetic respellings including informal oral forms, initialisms (but no acronyms), and mixtures of clipping together with homophone and phonetic respellings. Clippings were the most frequent process (especially back-clippings and initialisms), followed by homophone respellings. There were different ways of metalinguistically marking reduction, but capitalisation was by far the most frequent. There is much individual variation in the frequencies of the different processes, although most were within normal distribution. The fact that nonnative speakers seem to generally follow reduction patterns of native speakers suggests that reduction is a universal process.

Environmental initiatives: towards triple-bottom line reporting

The objective of this study was to investigate the quantity and quality of voluntary environmental disclosures in the annual reports of firms listed by market capitalisation on the Australian Stock Exchange. The periods examined were those immediately prior and subsequent to the release of the Exposure Draft Coalition for Environmentally Responsible Economics (CERES) Global Reporting Initiatives (GRI) issued in March 1999. Using content analysis to focus on the environmental aspects, the study compared 425 annual reports over a two-year period and 60 environmental reports, in order to explore reporting practices in the periods surrounding this intervention. The results suggest a trend to triple-bottom reporting, and a significant change in the quality and quantity of environmental information, albeit in specific categories.

Environmental reporting initiatives: towards triple-bottom line reporting or the intergration of financial and environmental performance

This objective of this study was to investigate the quantity and quality of voluntary environmental disclosures in the annual reports of the top 500 firms listed by market capitalisation on the Australian Stock Exchange. The periods examined were those immediately prior and subsequent to the release of the Exposure Draft Coalition for Environmentally Responsible Economics (CERES) Global Reporting Initiatives(GRI) issued in March 1999. Using content analysis to focus on the environmental aspects, and drawing heavily on the research of Gamble et al (1995), the study compared 425 annual reports over a two year period and 60 environmental reports, in order to explore reporting practices in the periods surrounding this intervention. The results suggest a trend to triple bottom reporting, and a significant change in the quality and quantity of environmental information, albeit in specific categories.

EBanking adaptation and dot.com viability : a comparison of Australian and Indian experiences in the banking sector

With the advent of widely-accepted eBusiness activities, many banks have floated dot.com entities to create a presence on the Internet and take advantage of its power and reach. Like many other businesses, banks expected an increase in market capitalisation as a result of their dot.com floats, perceived broadly as a measure of growing profitability. Despite the negative publicity that the recent spate of dot.com crashes has generated, banks seem to continue floating online spin-offs. Our exploratory study investigates this phenomenon, studying the drivers for change in the evolution of the banking sector, and the move towards electronic banking. We focussed on two economies – Australia and India – to aggregate the major factors in this evolution from the perspective of two disparate economies.

The paper describes our qualitative, document-based investigation of the Australian and Indian banking sectors, and subsequent quantitative analysis of the impact of dot.com floats on market capitalisation within this market sector. We then describe the effect of applying both Transaction Cost Economics to our findings, which indicates that the cost of transacting business has been reduced overall by the creation of dot.com entities; and “catch-up, fall-behind, forge ahead” theory to gain an economic perspective. The paper provides both practical assistance for banks in making decisions regarding e-portfolios, as well as for policy makers in the economies reviewed; and has the potential to contribute to academic research into eBanking more generally.

Changing journalism for the likely present

Media convergence and newsroom integration have become industry buzzwords as the ideas spread through newsrooms around the world. In November 2007 Fairfax Media in Australia introduced the newsroom of the future model, as its flagship newspapers moved into a purpose-built newsroom in Sydney. News Ltd, the country’s next biggest media group, is also embracing multi-media forms of reporting. What are the implications of this development for journalism? This paper examines changes in the practice of journalism in Australia and around the world. It attempts to answer the question: How does the practice of journalism need to change to prepare not for the future, but for the likely present.

Early in November 2007 The Sydney Morning Herald, the Australian Financial Review and the Sun-Herald moved into a new building dubbed the ‘newsroom of the future’ at One Darling Island Road in Sydney’s Darling Harbour precinct. Phil McLean, at the time Fairfax Media’s group executive editor and the man in charge of the move, said three quarters of the entire process involved getting people to ‘think differently’ – that is, to modify their mindset so they could work with multi-media.

The new newsroom symbolised the culmination of a series of major changes at Fairfax. In August 2006 the traditional newspaper company, John Fairfax Ltd, changed its name to Fairfax Media to reflect its multi-platform future. In March 2007 Fairfax launched Australia’s first online-only daily publication in Queensland, brisbanetimes.com.au. In May 2007 Fairfax completed its merger with Rural Press to become the biggest media company in Australasia, with annual revenues of about $2.5 billion and market capitalisation of about $7 billion. Two months later Fairfax got even bigger when it acquired at least one radio station in all Australian capital cities plus television studios when it bought Southern Cross Broadcasting. Fairfax is expected to bid for one of the two digital television licences made available by the changes to media ownership laws promulgated in May 2007.

The aim in moving Fairfax from a print to a multi-platform company was to reach as large an audience as possible. ‘We have a total readership in print of over 4 million per day and online of over 5 million per month’, CEO David Kirk said at the time of the Rural Press merger. ‘Our brand of quality, independent, balanced journalism will serve and support more communities than ever’ (Kirk 2007). A few months earlier chairman Ron Walker had written in the company’s annual report: ‘Fairfax is evolving into a truly digital media company’ (2006: 2). Within five years Fairfax would be a significantly bigger Internet company that distributed its content ‘over more media’, Kirk wrote in the same report (2006: 5).

Kirk developed a three-pronged strategy. The first part of the strategy involved the need to ‘defend and grow our newspaper publishing businesses’ – that is, to consolidate and develop the existing newspapers, whose circulations were holding steady during the week and improving on Saturdays. The second part involved plans to ‘accelerate the revenue and earnings of our digital business’. The third part was ‘to build a digital media company for the twenty-first century’ (Fairfax annual report 2006: 3). In June 2007 Kirk appointed Tim Mannes project leader for the Fairfax Media-Rural Press integration. ‘The purpose of the integration work is to bring the two companies together and build what is truly Australasia’s leading media company’, Mannes wrote in a memo to all staff on 7 June 2007. ‘It’s vital throughout this process that we maintain continuity and momentum and protect the interests and needs of our customers’ (2007: 1).

The business model appears attractive. Kirk said Fairfax’s increased scale and diversity would mean it relied less on classified lineage advertising in major metropolitan newspapers, so it could ‘rapidly develop the best online response to changing media advertising patterns’. In the two years to 2006, online’s contribution to Fairfax’s profits had grown from 1 per cent to 14 per cent with ‘much more to come’. Online’s share of the national advertising pie had grown from 2 per cent in 2002 to 10 per cent in 2006 (Beverley 2007: 6) and had jumped to 14 per cent in 2007. Analysts said they were happy with Fairfax’s move ‘from a newspaper company to a media company’ and banks such as Credit Suisse upgraded their profits forecast (AFR 19 September 2007: 37).

Planning for the move to One Darling Island Road in Sydney’s Darling Harbour started early in 2006. Fairfax CEO David Kirk took personal responsibility. He and chairman Ron Walker visited integrated sites around the world, along with a group of editorial bosses. The favoured site was The Daily Telegraph in London, which embraced convergence from June 2006. CEO Murdoch McLennan hired a consultant from Ifra, Dr Dietmar Schantin, director of the Newsplex, to facilitate the move from mono-media to multi-media at The Telegraph. Schantin said change was less about new technologies and more about altering the established mindset. The focus must be on the audience: ‘The whole idea of audience orientation seems to be quite new for some newspapers. In the past it was more “we know what is good for our readers and so we distribute the content”.’ Newspapers were a service industry whose service was information and news, he said. Newspapers had to learn to ‘serve’ its audience with the things the audience wanted to know, on any appropriate platform. ‘We start from the audience. What they want is a very important point. That does not mean that a newspaper should just do what the audience wants. The newspaper [also] needs to stick
to its core values’ (Luft 2006, Coleman 2007: 5).

Tom Curley, CEO of the world’s biggest newsgathering organisation, Associated Press, gave an important speech to the annual Knight-Bagehot dinner in New York in November 2007. The news industry had come to a fork in the road and needed to take bold steps to secure the audiences and funding to support journalism’s essential role for both the economy and democracy, he said. Otherwise the media industry would find itself ‘on an ugly path to obscurity’. He similarly emphasised the need to serve the audience: ‘Our focus must be on becoming the very best at filling people’s 24-hour news needs. That’s a huge shift from the we-know-best, gatekeeper thinking. Sourcing, fact gathering, researching, storytelling, editing [and] packaging aren’t going away’
(Curley 2007).

Kirk appointed a ‘newsroom of the future’ committee from editorial (reporters and photographers), IT and HR. The committee initiated a study tour by editorial executives of leading integrated and converged newsrooms in the UK and the US in April 2007. This became known as the ‘Tier 1’ course and involved the editor and deputy editor of The Age, and the news editor of The Sydney Morning Herald. The Herald’s editor went to the annual conference of the World Association of Newspapers in Cape Town, South Africa in June 2007 because that event featured convergence as one of its main themes (PANPA Bulletin June 2007: 6). The committee designed a two-day awareness course for senior editorial managers, known as ‘Tier 2’, that was run in Sydney in July 2007. The ‘Tier 3’ program for all editorial staff started in August 2007 and this ‘multi-media awareness program’ continued until the end of the year. A ‘Tier 4’ course for about 10 per cent of editorial staff (about 40 journalists), where they learned a range of multi-media skills, was scheduled to start after the Beijing Olympics in 2008. The author facilitated most of the Tier 2 and 3 courses.

The Tier 3 and 4 courses have profound implications for journalism education in Australia because they represent the start of major changes to how journalists work in Australia. The process reflects evolution in newsroom practices around the world. In November 2006 Ifra, the international media research company, asked newspaper executives worldwide about their priorities for 2007. The survey attracted 240 responses from 43 countries and results appeared in January 2007. Integration, editorial convergence and cross-media strategies attracted the most attention. Four in five executives rated it one of their top priorities, and half made it their main priority in terms of allocating ‘significant’ funds (Ifra 2007: 34). Ifra repeated the survey in November 2007 and published the results in January 2008. Expanding web strategies was first on the list for 2008, just ahead of editorial convergence strategies, which topped the list in 2007. Improving video and audio content jumped 14 places, and mobile phone strategies leapt 9 places between 2007 and 2008 to be near the top of the list (Ifra 2008: 8).