kaal:claim:2957645-023

Where conversion has a negative effect on stock price, management is further incentivized to maintain and manage risk in order to avoid reputational loss and the income reduction caused by losses in stock options.

In situations where conversion had a negative effect on stock price,49 management could be incentivized further to maintain and manage risk to avoid reputational loss and income reduction due to losses in stock

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 depresses the issuer's stock price
• management compensation includes stock options

mechanismsupport: arguedcorporate-governancerisk-and-incentivescontingent-capital

• extends kaal:claim:2097160-025 Replacing stock options with contingent convertible bonds both lowers total executive compensation and disince...

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• Extension: Assets Write-Down in China: Incentives and the Effect of Corporate Governance