# kaal:claim:1998455-021

**Claim.** Where institutions hold each other's contingent capital and share similar risk profiles, they will be hesitant after conversion to vote for necessary organizational changes at a competitor or otherwise exercise their voting rights, because they are similarly exposed and may face reciprocal voting power.

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

**Holds when.**

- where SIFIs hold similar risk profiles and CCS positions in similarly exposed entities
- especially where cross holdings are reciprocal

**Source quote.**

> With sim- ilar risk profiles and CCS positions in similarly exposed entities, SIFIs could be hesitant to vote for necessary organizational changes or otherwise exercise their voting rights on a competitor after conversion of CCS into equity.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), IV.B. Conflicts of Interest, page 35

**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.** reciprocal-voting-passivity  (family: governance-participation-collapse)

**Topics.** governance-design, corporate-governance, systemic-risk

**Keywords.** cross-holdings, voting-rights, conflicts-of-interest, corporate-governance, sifis

**Related claims.**

- extends: https://wulfkaal.github.io/claims/1908473-029

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