作者：Sundaresan, Suresh; Wang, Zhenyu
作者单位：Columbia University; Indiana University System; Indiana University Bloomington; IU Kelley School of Business
摘要：Contingent capital (CC), which aims to internalize the costs of too-big-to-fail in the capital structure of large banks, has been under intense debate by policy makers and academics. We show that CC with a market trigger, in which direct stakeholders are unable to choose optimal conversion policies, does not lead to a unique competitive equilibrium unless value transfer at conversion is not expected ex ante. The no value transfer restriction precludes penalizing bank managers for taking excess...
作者：Cheng, Ing-Haw; Hong, Harrison; Scheinkman, Jose A.
作者单位：Dartmouth College; Princeton University; Columbia University
摘要：Many believe that compensation, misaligned from shareholders' value due to managerial entrenchment, caused financial firms to take risks before the financial crisis of 2008. We argue that, even in a classical principal-agent setting without entrenchment and with exogenous firm risk, riskier firms may offer higher total pay as compensation for the extra risk in equity stakes borne by risk-averse managers. Using long lags of stock price risk to capture exogenous firm risk, we confirm our conject...
