# kaal:claim:1998455-012

**Claim.** Converting contingent capital securities prematurely, while the institution can still operate without an equity injection, dissipates the benefit: the injection is no longer available at the later moment when the institution cannot obtain other funding.

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

**Holds when.**

- where the trigger fires before the institution has exhausted other funding sources

**Source quote.**

> Converting CCS into equity prematurely at a time when the financial institutions can still operate without an equity capi- tal injection could mean that the CCS capital injection would no longer be available when the financial institution will be unable to obtain other funding.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), III.B. Unresolved Design Issues, page 23

**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

**Failure mode.** premature-conversion  (family: trigger-design-failure)

**Topics.** contingent-capital

**Keywords.** trigger-design, premature-conversion, contingent-capital, recapitalization, failure-modes

**Related claims.**

- restates: https://wulfkaal.github.io/claims/1908473-003
- restated_by: https://wulfkaal.github.io/claims/2061166-031

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