The Review of Corporate Finance Studies Vol. 8 No. 2 2019
Contingent Capital Trigger Effects: Evidence from Liability Management Exercises
open access
Abstract
This paper studies liability management exercises (LME) by banks, which have comparable regulatory capital effects than contingent capital triggers. LMEs are concentrated on low capitalization situations, both in the cross-section and in the time series and are frequently associated with equity issuances. These exercises prove effective at improving bank capitalization levels. The market reaction to LMEs is positive and mostly accrues to debt holders. These findings strengthen the case for innovative liabilities securities as a tool to improve bank resilience. Received February 8, 2019; editorial decision May 16, 2019 by Editor Andrew Ellul.
- DOI
- 10.1093/rcfs/cfz004
- Volume
- 8
- Issue
- 2
- Pages
- 235-259
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref