kaal:claim:1908473-029

Information asymmetries between market participants and a systemically important institution's management before default can be reduced if a financial weakening after conversion of contingent capital triggers a voting rights increase.

The information asymmetries between market participants and a SIFI's management before a SIFI defaults199 could be minimized if a financial weakening of the SIFI after conversion of CCS triggers a voting rights increase.

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011), IV.B. Second Trigger, p. 37
https://ssrn.com/abstract=1908473 · source PDF

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

• Requires that the weakening occur after contingent capital has converted into equity

mechanismsupport: argueddisclosuresystemic-riskrisk-and-incentivesgovernance-design

• extended_by kaal:claim:1998455-032 A contingent capital design that increases voting rights on conversion allows systemically important instituti...
• extended_by kaal:claim:1998455-021 Where institutions hold each other's contingent capital and share similar risk profiles, they will be hesitant...

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