How Design Features Affect the Balance Sheet Presentation of CoCo-bonds
2 Pages Posted: 16 Oct 2020
Date Written: April 14, 2020
CoCo-bonds are hybrid capital instruments. Therefore, they can be classified as debt or as equity on the balance sheet. International Financial Reporting Standards do not yield clear guidance on how to account for CoCo-bonds. We investigate empirically how CoCo-bonds are accounted for in bank practice. We identify relevant design features which decide whether the bond is classified as debt or equity. Thereby, we shed light on the factors which determine the balance sheet representation and provide useful information for the process of designing the bonds, considering its consequent accounting treatment.
Keywords: CoCo-bonds; IFRS; hybrid capital; financial instruments, financial reporting
JEL Classification: G1; G21; G23; M41
Suggested Citation: Suggested Citation