# kaal:claim:1998455-010

**Claim.** 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.

**Type.** mechanism  **Support.** argued

**Holds when.**

- where conversion dilutes existing common shareholders

**Source quote.**

> 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, page 19

**Cite as.** Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

**Verify.** sha256 of source PDF `1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Initial%20Reflections%20on%20the%20Possible%20Application%20of%20Contingent%20Capital%20in%20Corporate%20Governance.pdf

**Topics.** contingent-capital, risk-and-incentives, corporate-governance, governance-design

**Keywords.** contingent-capital, dilution, risk-taking, shareholder-pressure, corporate-governance

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/2957645-022
- restated_by: https://wulfkaal.github.io/claims/2061166-022
- restates: https://wulfkaal.github.io/claims/1908473-018

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