The threat of dilution of stock holdings, combined with the threat of loss on conversion, reduces the pressure shareholders place on the management of systemically important financial institutions to take higher risks.
Source quote, verbatim
The threat of dilution of stock holdings in combination with a threat of loss due to conversion could help reduce shareholder pressure on SIFI management to take higher risks.
From
Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), III.A. Possible Applications, p. 19 https://ssrn.com/abstract=1998455 · source PDF
Cite as
Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455
Holds when
where conversion dilutes existing common shareholders
restated_bykaal:claim:2957645-022 The threat of dilution of stock holdings, combined with the threat of loss upon conversion, could help reduce ...
restated_bykaal:claim:2061166-022 Because conversion carries a threat of loss and implicit dilution of stock holdings, contingent capital reduce...
restateskaal:claim:1908473-018 The threat of loss on conversion and the implicit dilution of existing stock holdings reduce shareholders' inc...
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