kaal:claim:2957645-022

The threat of dilution of stock holdings, combined with the threat of loss upon conversion, could help reduce the pressure shareholders place on management of systemically important financial institutions to take increasing risks.

The threat of dilution of stock holdings, in combination with a threat of loss due to conversion could help reduce shareholder pressure on SIFI management to take increasing risks.48

Kaal, Dynamic Regulation via Contingent Capital (2017), III. Contingent Capital, p. 13
https://ssrn.com/abstract=2957645 · source PDF

Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645

• conversion dilutes existing common shareholders
• shareholders anticipate the dilution ex ante

mechanismsupport: arguedcorporate-governancerisk-and-incentivessystemic-riskcontingent-capitalgovernance-design

• restates kaal:claim:1998455-010 The threat of dilution of stock holdings, combined with the threat of loss on conversion, reduces the pressure...
• restates kaal:claim:1908473-018 The threat of loss on conversion and the implicit dilution of existing stock holdings reduce shareholders' inc...
• restates kaal:claim:2061166-022 Because conversion carries a threat of loss and implicit dilution of stock holdings, contingent capital reduce...
• extends kaal:claim:1908473-014 The incentive effects of corporate governance controls may not operate in systemically important financial ins...

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