kaal:claim:2097160-032

The governance benefits of traditional inside debt, incentive optimization and reduced agency costs, all depend on the entity remaining solvent, and inside debt supplies no mechanism of its own to ensure that solvency.

value and the associated governance benefits215 incentive optimization216 and reduction of agency costs217 depend on the solvency of the respective entity. Inside debt without a conversion feature provides no mechanism to ensure the solvency of the entity.

Wulf A. Kaal, Contingent Capital in Executive Compensation (2012), VI.A Contingent Capital as Inside Debt, p. 55
https://ssrn.com/abstract=2097160 · source PDF

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

• inside debt without a conversion feature, such as pensions and deferred compensation

failuresupport: arguedfailure: Inside debt has no solvency preserving mechanismfamily: agency-cost-and-managerial-opportunismcorporate-governance

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