kaal:claim:1998455-033

Because the threat of a change of control leads leaders to take fewer risks in order to avoid triggering conversion, a contingent capital design with increased voting rights allows those leaders to act more in accordance with their moral convictions and conscience.

It could allow SIFI leaders to increasingly act in accordance with their moral convictions and conscience because the threat of change of control may influence SIFI leaders to take fewer risks to avoid triggering the conversion of CCS and a possible change of con- trol.

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), VII.C. Increased Voting Rights, p. 47
https://ssrn.com/abstract=1998455 · source PDF

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

• where conversion carries a credible threat of change of control
• where shareholders respond by allowing management more discretion over risk taking

mechanismsupport: arguedgovernance-designrisk-and-incentives

• extends kaal:claim:1908473-025 To balance constituent incentives and prevent abuse, the voting rights increase should be calibrated so that c...

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