Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance
50 Pages Posted: 3 Feb 2012
Date Written: 2012
The failure of systemically important financial institutions (SIFIs) during the 2008–2009 financial crisis may underscore possible shortcomings in corporate governance. The regulatory evaluation of contingent capital in the United States could be an opportunity to assess the possible application of contingent capital in the corporate governance of SIFIs. While regulatory initiatives in Europe and the academic debate in the United States are dominated by efforts to improve the technical design features of contingent capital securities, this Article suggests that contingent capital designs in various jurisdictions could benefit from experimentation and a learning experience that takes corporate governance applications into account. As the design features evolve and their scope and impact become clearer, possible corporate governance improvements could become more obvious.
Keywords: corporate law, corporate governance, financial institutions, contingent capital, contingent capital securities
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