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Although the equity premium is - both from a conceptual and empirical perspective - a widely researched topic in finance, there is still no consensus in the academic literature about its magnitude. In this paper, we propose a different estimation method which is based on credit valuations. The...
Persistent link: https://www.econbiz.de/10010305726
We argue that contingent convertible capital (CoCo-Bonds) might have perverse risk-taking incentives for banks (asset substitution problem) and discourage them from investing in positive NPV projects and issuing new equity in times of crisis (debt overhang problem). Whenever the conversion price...
Persistent link: https://www.econbiz.de/10010305972
In this paper, we analyze the effect of the conversion price of CoCo bonds on equity holders' incentives. First, we use an option-pricing context to show that CoCo bonds can magnify equity holders' incentives to increase the riskiness of assets and decrease incentives to raise new equity in a...
Persistent link: https://www.econbiz.de/10010520626
Persistent link: https://www.econbiz.de/10009355832
In this paper, we analyze the effect of the conversion price of CoCo bonds on equity holders' incentives. First, we use an option-pricing context to show that CoCo bonds can magnify equity holders' incentives to increase the riskiness of assets and decrease incentives to raise new equity in a...
Persistent link: https://www.econbiz.de/10010480938
Although the equity premium is - both from a conceptual and empirical perspective - a widely researched topic in finance, there is still no consensus in the academic literature about its magnitude. In this paper, we propose a different estimation method which is based on credit valuations. The...
Persistent link: https://www.econbiz.de/10003750001
Persistent link: https://www.econbiz.de/10011389081
In this paper, we analyze the e ffect of the conversion price of CoCo bonds on equity holders' incentives. First, we use an option-pricing context to show that CoCo bonds can magnify equity holders' incentives to increase the riskiness of assets and decrease incentives to raise new equity in a...
Persistent link: https://www.econbiz.de/10013038449
Persistent link: https://www.econbiz.de/10010191938
Persistent link: https://www.econbiz.de/10011782200