VALUATION OF QUOTED SHARES Working Party on Financial

VALUATION OF QUOTED SHARES Working Party on Financial Statistics 2– 4 November 2009 – Item 3. a. by Michèle Chavoix-Mannato (STD)

VALUATION OF QUOTED SHARES Main objectives • To remind Delegates and experts of the work already carried out on the measurement of equity • To inform them on changes resulting from SNA 2008 • To present a new survey on the valuation of unquoted shares Delegates are invited to discuss this survey and propose amendments

VALUATION OF QUOTED SHARES Historical background • In SNA 1993: o No breakdown of ‘Shares and other equity’ o No reference to the valuation of shares • Since 2002 o Eurostat WGUS: approval of an addendum Issue N° 9 to the Manual on Sources and Methods (April 2004) o OECD Workshop on Unquoted Shares: collection of methodological information (limited number of countries) and volunteers to test the European method (October 2004) o OECD Task Force on the Valuation and Measurement of Equity (TFVME): review of practical approaches in OECD countries; recommendations relating to valuation & further breakdown; and transmission of preliminary conclusions to the AEG (April 2005)

VALUATION OF QUOTED SHARES Historical background (cont. ) o Advisory Expert Group on National Accounts: commitment to the Task Force of documenting reasons for changes and proposals (July 2005) o OECD TFVME: proposal for two possible approaches, either Market capitalisation method, or Other methods (NAV, PV, OFBV. . ) and agreement for flexibility; support to split AF 5 between Corporate shares (AF 51) and Investment fund units (AF 52) (October 2005) o Advisory Expert Group on National Accounts: agreement on the principle of flexibility in the treatment of unquoted shares; report of the decision for a further breakdown of AF 5 (February 2006)

VALUATION OF QUOTED SHARES White-cover version of SNA 2008 Approved by the Bureau of the UNSC in August 2008: o Chapter 3: general remark on issues regarding the nonavailability of market prices and the substitutive methods o Chapter 11: new appellation for F 5/AF 5 ‘Equity and Investment funds shares’ and breakdown between Equity (F 51/AF 51) and Invesment funds shares (F 52/AF 52), and further split of F 51/AF 51 o Chapter 13: enumeration and definition of the various methods of valuation; invitation to compilers to be transparent and clearly state the method they use.

VALUATION OF QUOTED SHARES FOLLOW-UP • Need for updated information on national practices for the valuation of unquoted shares • Need for greater country coverage • Proposal: to launch a survey among all OECD countries to know which method is currently applied (or will be applied)

VALUATION OF QUOTED SHARES Content of the new survey to be launched after the meeting, if approved • General questions regarding o the current situation in financial accounts and financial balance sheets o the consistency with BOP and IIP statistics • Specific questions on the sources and methods of Equity (F 51/AF 51 and its three components) • Additional questions regarding Investment funds shares (F 52/AF 52)

VALUATION OF QUOTED SHARES Specific questions on the sources and methods of Equity (F 51/AF 51 and its three components) • Main sources and supplementary information used for quoted shares, unquoted shares and other equity q For each source, detailed information of the frequency, timeliness, coverage, valuation …. • Method used for quoted shares q Market prices or other valuation • Method used to compile unquoted shares q Method recommended by Eurostat q Method proposed in the SNA 2008

VALUATION OF QUOTED SHARES Additional questions regarding Investment funds shares (F 52/AF 52) • Availability of components of Investment funds shares q according to the composition of their assets: o Money market funds o Other types of funds q between listed and unlisted shares • Main sources used • Valuation of investment funds shares

VALUATION OF QUOTED SHARES Conclusion • Delegates are invited to endorse the OECD proposal to launch a new survey on valuation of unquoted shares • Delegates are invited to comment the content of the survey and to amend it if necessary