Rating Agencies: Is There an Agency Issue?

This paper examines the potential for conflicts of interest in the debt ratings business. Inherent in the current business model is the fact that firms whose obligations are rated by the agencies pay fees for those ratings, which in turn comprises virtually all of the revenues of the rating agencies. Given the public nature of the ratings, no other business model seems feasible for rating agencies as commercial ventures, so that conflicts of interest are inherent in this important part of the financial markets infrastructure. This paper examines the nature of this conflict, how it is managed, and the significance of market structure and reputation in preventing conflict exploitation. These issues are linked to the use of ratings for regulatory certification purposes, as well as the international dimensions of debt ratings activity through investments and joint ventures of the major rating groups

Four Years after Enron Assessing the Financial Market Regulatory Clean Up

This paper assesses the efforts to “clean up” financial markets and corporate governance practices in the wake of the bankruptcies and scandals of the early 2000s. It begins by reviewing what actually happened during that period, what damages ensued and the responses of government enforcement agencies and policy makers, then assesses the impact of the various actions that followed and their effectiveness. The paper then looks at these actions in an historical context, examining the possibilities of imbalances of power between market insiders and ordinary investors that provide an uneven market environment. Finally, it discusses actions that might be taken to have a greater impact on leveling the uneven market, and what might be expected in the way of altered governance practices for the future

Rating Agencies: Is There an Agency Issue? Roy C. Smith and Ingo Walter

This paper examines the potential for conflicts of interest in the debt ratings business. Inherent in the current business model is the fact that firms whose obligations are rated by the agencies pay fees for those ratings, which in turn comprises virtually all of the revenues of the rating agencies. Given the public nature of the ratings, no other business model seems feasible for rating agencies as commercial ventures, so that conflicts of interest are inherent in this important part of the financial markets infrastructure. This paper examines the nature of this conflict, how it is managed, and the significance of market structure and reputation in preventing conflict exploitation. These issues are linked to the use of ratings for regulatory certification purposes, as well as the international dimensions of debt ratings activity through investments and joint ventures of the major rating groups

State Taxation of Federally Deferred Income: The Interstate Dimension

Most states that impose income taxes conform their levies to the federal model. Consequently, when income is realized but not recognized at the federal level-for example, when a taxpayer reinvests the gain from the sale of her former residence in a new residence or when a taxpayer realizes gain from the exchange of like-kind property -- states typically follow the federal rule in deferring recognition of that income. On the assumption that state conformity to the federal nonrecognition rules reflects an implicit endorsement of the policies underlying those rules, state deferral ordinarily raises no issue independent of those raised by federal deferral. When nonrecognition transactions have an interstate dimension, however, issues are raised at the state level that are not usually encountered at the federal level. For example, when a taxpayer reinvests the gain from the sale of her former residence in a new residence in a different state or when a taxpayer realizes gain from the exchange of like-kind property through the acquisition of property in another state, one must address not only the question of when income is recognized, but also the question of where it is recognized. This article considers the appropriate state tax treatment of nonrecognition transactions that cross state lines. We examine issues of tax policy and constitutional law raised by such transactions by focusing on two discrete nonrecognition transactions: (1) nonrecognition of gain from the sale of a personal residence by a taxpayer who moves to another state and (2) nonrecognition of gain from the exchange of like-kind property located in different states. Despite the differences between these two transactions, the nonrecognition issues they raise share common themes: whether a state should respect federal nonrecognition rules for transactions with which it has a more limited jurisdictional relationship than does the federal government, and whether the Constitution imposes limitations on a state\u27s power to fashion its own rules in this domain

Beyond deficiency:Potential benefits of increased intakesof vitamin K for bone and vascular health

Vitamin K is wellknown for its role in the synthesisof a number of blood coagulationfactors.During recent years vitaminK-dependent proteins werediscovered to be of vital importancefor bone and vascular health.Recommendations for dietary vitaminK intake have been made onthe basis of the hepatic requirementsfor the synthesis of bloodcoagulation factors.Accumulatingevidence suggests that the requirementsfor other functions thanblood coagulation may be higher.This paper is the result of a closedworkshop (Paris,November 2002)in which a number of Europeanvitamin K experts reviewed theavailable data and formulated theirstandpoint with respect to recommendeddietary vitamin K intakeand the use of vitamin K-containingsupplements

Spatially Resolved Spitzer-IRS Spectral Maps of the Superwind in M82

We have mapped the superwind/halo region of the nearby starburst galaxy M82 in the mid-infrared with $Spitzer-IRS$. The spectral regions covered include the H$_2 S(1)-S(3)$, [NeII], [NeIII] emission lines and PAH features. We estimate the total warm H$_2$ mass and the kinetic energy of the outflowing warm molecular gas to be between $M_{warm}\sim5-17\times10^6$ M$_{\odot}$ and $E_{K}\sim6-20\times10^{53}$ erg. Using the ratios of the 6.2, 7.7 and 11.3 micron PAH features in the IRS spectra, we are able to estimate the average size and ionization state of the small grains in the superwind. There are large variations in the PAH flux ratios throughout the outflow. The 11.3/7.7 and the 6.2/7.7 PAH ratios both vary by more than a factor of five across the wind region. The Northern part of the wind has a significant population of PAH's with smaller 6.2/7.7 ratios than either the starburst disk or the Southern wind, indicating that on average, PAH emitters are larger and more ionized. The warm molecular gas to PAH flux ratios (H$_2/PAH$) are enhanced in the outflow by factors of 10-100 as compared to the starburst disk. This enhancement in the H$_2/PAH$ ratio does not seem to follow the ionization of the atomic gas (as measured with the [NeIII]/[NeII] line flux ratio) in the outflow. This suggests that much of the warm H$_2$ in the outflow is excited by shocks. The observed H$_2$ line intensities can be reproduced with low velocity shocks ($v < 40$ km s$^{-1}$) driven into moderately dense molecular gas ($10^2 <n_H < 10^4$ cm$^{-3}$) entrained in the outflow.Comment: 19 pages and 12 figures; accepted in MNRA