# kaal:claim:2097160-015

**Claim.** Regulatory triggers insufficiently incentivize executives to lower risk, because executives would not have to self-monitor and adjust their own risk-taking preferences in order to avoid the trigger.

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

**Holds when.**

- conversion decided by regulators rather than by an automatic institution-specific term

**Source quote.**

> regulatory triggers may insufficiently incentivize executives to lower risk because the executives would not have to self-monitor and adjust their risk-taking preferences to avoid the trigger.

**From.** Wulf A. Kaal, *Contingent Capital in Executive Compensation* (2012), V.B.1 Automatic Institution-Specific Early Trigger, page 37

**Cite as.** Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160

**Verify.** sha256 of source PDF `1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Contingent%20Capital%20in%20Executive%20Compensation.pdf

**Failure mode.** No self-monitoring under regulatory triggers  (family: trigger-design-failure)

**Topics.** contingent-capital, compliance, risk-and-incentives

**Keywords.** regulatory-trigger, self-monitoring, risk-taking, incentives

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