# kaal:claim:1908473-015

**Claim.** Switching to contingent capital financing may reinforce rather than reduce risk incentives, and whether the risk incentives generated by contingent capital outweigh its risk reduction potential remains unresolved.

**Type.** failure  **Support.** argued

**Holds when.**

- Turns on the design features of the securities and on how much control equity holders retain after conversion

**Source quote.**

> In effect, however, switching to CCS financing could reinforce risk incentives. Additional research may be needed to determine if risk incentives generated by CCS113 may outweigh their potential for risk reduction.

**From.** Wulf A. Kaal, Christoph Henkel, *Contingent Capital with Sequential Triggers* (2011), II.B. Limitations and Open Issues, page 24

**Cite as.** Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473

**Verify.** sha256 of source PDF `9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Henkel%20-%202011%20-%20Contingent%20Capital%20with%20Sequential%20Triggers.pdf

**Failure mode.** risk-incentive-reinforcement  (family: moral-hazard-and-bailout-expectation)

**Topics.** risk-and-incentives, contingent-capital

**Keywords.** risk-shifting, contingent-capital-limits, moral-hazard, open-research

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/1998455-019
- extended_by: https://wulfkaal.github.io/claims/1998455-017

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.