# kaal:claim:2061166-022

**Claim.** Because conversion carries a threat of loss and implicit dilution of stock holdings, contingent capital reduces shareholders' incentive to push management toward higher risk in pursuit of higher returns.

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

**Holds when.**

- conversion terms that dilute existing equity holders

**Source quote.**

> Moreover, given the threat of loss due to conversion and the implicit dilution of stock holdings, contingent capital has the potential to reduce incentives for shareholders to encourage management to take higher risks for higher returns.

**From.** Christoph K. Henkel, Wulf A. Kaal, *Contingent Capital in European Union Bank Restructuring* (2012), IV. CONTINGENT CAPITAL IN BANK RESTRUCTURING, page 53

**Cite as.** Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166

**Verify.** sha256 of source PDF `43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Henkel%20and%20Kaal%20-%202012%20-%20Contingent%20Capital%20in%20European%20Union%20Bank%20Restructuring.pdf

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

**Keywords.** contingent-capital, dilution, risk-taking-incentives, shareholder-behavior

**Related claims.**

- restates: https://wulfkaal.github.io/claims/1908473-018
- restates: https://wulfkaal.github.io/claims/1998455-010
- restated_by: https://wulfkaal.github.io/claims/2957645-022

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.