# Conversion `kaal:entity:conversion` **Status.** derived This node is assembled mechanically from the 8 claims that carry the concept tag `conversion`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 8 claims across 3 works, 2011 to 2012. **2011** - [1908473-003](https://wulfkaal.github.io/claims/1908473-003) [failure/argued] *(failure mode)* -- If conversion of contingent capital securities is triggered too early, before a real financial need for an equity injection exists, the expected financial impact of that injection may dissipate. > If conversion of CCS from debt into equity is triggered too early without a real financial need for an equity capital injection and additional voting shareholders, the expected financial impact of the equity capital injection may dissipate. Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473 - [1908473-004](https://wulfkaal.github.io/claims/1908473-004) [failure/argued] *(failure mode)* -- If conversion from debt to equity is triggered too late, the institution may already be in the resolution stage, and conversion at that point may not supply enough equity to produce the intended financial improvement. > On the other hand, if conversion from debt to equity is triggered too late, the financial institution may already be in the resolution stage, and conversion at that stage may not supply the company with sufficient equity to facilitate the desired financial improvement. Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473 - [1908473-027](https://wulfkaal.github.io/claims/1908473-027) [design/argued] -- Conversion at the first trigger under this proposal lacks the finality of Coffee's design, because it does not necessarily hand the institution to creditors unless the firm deteriorates further. > The conversion following the first trigger does not have the same finality as that in Coffee's proposal; it does not necessarily mean that creditors will take over the institution, unless it further deteriorates. Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473 **2012** - [2061166-027](https://wulfkaal.github.io/claims/2061166-027) [design/argued] -- Efficient calibration of the triggering event is the central design problem for contingent capital, and the optimal design of a trigger that converts debt into equity remains unclear. > The efficient calibration of triggering events is central to the design of contingent capital. The optimal design for a trigger event that converts debt into equity is unclear. Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166 - [2061166-031](https://wulfkaal.github.io/claims/2061166-031) [failure/argued] *(failure mode)* -- A trigger that fires too early wastes the equity injection: conversion occurs without a real need for capital or additional voting shareholders, and the effect of the injection may have dissipated by the time it is actually needed. > If conversion is triggered too early without a real need for an equity capital injection (and additional voting shareholders), the impact of the equity capital injection may have dissipated and may no longer be available when actually needed. Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166 - [2061166-032](https://wulfkaal.github.io/claims/2061166-032) [failure/argued] *(failure mode)* -- A trigger that fires too late is equally useless: by then the financial institution may already be in the resolution stage, and conversion at that point will not supply enough equity to turn the company around. > If conversion from debt to equity is triggered too late, the financial institution may already be in the resolution stage and conversion at that stage would not supply the company with sufficient equity to turn the company around. Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166 - [2097160-019](https://wulfkaal.github.io/claims/2097160-019) [mechanism/argued] -- Because conversion damages both the debt portion and the surviving equity portion of an executive's package at the moment equity matters most for total pay, the combined effect is a strong incentive for executives to lower risk in order to avoid the triggering event. > convertible bonds portion is converted and when equity is increasingly important to maintain the overall value of executive compensation.174 The combined effect could be a strong incentive for executives to take lower risks in order to avoid the triggering event.175 Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-021](https://wulfkaal.github.io/claims/2097160-021) [mechanism/argued] -- The impending threat of dilution from a possible conversion of investor-held contingent convertible bonds can motivate existing shareholders to become actively involved in the governance of the entity. > The impending threat of dilution for existing shareholders due to the possible conversion of the contingent convertible bonds held by investors may motivate existing shareholders to get actively involved in the governance of the entity.181 Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/conversion.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.