We examine whether the relationship between managerial risk-taking incentives and bank risk is sensitive to the … underlying macroeconomic conditions. We find that risk-taking incentives provided to bank executives are associated with higher … bank riskiness during economic downturns. We attribute this finding to the increase in moral hazard during macroeconomic …

extent of this debt overhang varies with bank characteristics. Our model predicts that riskier banks face higher debt … overhang from CoCos. Our empirical analysis confirms that riskier banks are less likely to issue CoCos than their safer … counterparts. Since under Basel III banks are expected to raise equity prior to CoCo conversion, riskier banks that anticipate …