![]() |
| Das Dokument ist frei verfügbar |
|
| | Nachweis | Kein Nachweis verfügbar |
|
| This paper examines the effect of CoCo bonds that qualify as additional tier 1 capital on bank fundamentals. The results reveal a significant reduction in the distance to insolvency following the hybrid bond issuance due to increased earnings volatility. Further analyses suggest a link between CoCo issuance and more active earnings management evidenced by a higher standard deviation of loan loss provisions and impairment charges. The findings substantiate long-standing theoretical hypotheses suggesting that the regulatory design requirements for going-concern CoCos adversely affect bank stability. Furthermore they correspond to the notion that private monitoring is largely absent as a corrective measure due to prevailing uncertainties and information frictions. |
|
|