The threat of loss on conversion and the implicit dilution of existing stock holdings reduce shareholders' incentive to press management for higher risk in pursuit of higher returns.
Source quote, verbatim
The threat of loss due to conversion of CCS and the implicit dilution of stock holdings could reduce incentives for shareholders to encourage management to take higher risks for higher returns.
From
Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011), II.A. Potential for Reform and Financial Stability, p. 17 https://ssrn.com/abstract=1908473 · source PDF
Cite as
Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473
restated_bykaal:claim:2061166-022 Because conversion carries a threat of loss and implicit dilution of stock holdings, contingent capital reduce...
restated_bykaal:claim:1998455-010 The threat of dilution of stock holdings, combined with the threat of loss on conversion, reduces the pressure...
restated_bykaal:claim:2957645-022 The threat of dilution of stock holdings, combined with the threat of loss upon conversion, could help reduce ...
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