Designing bankers' pay: Using contingent capital to reduce risk-shifting incentives

2021 ◽  
Author(s):  
Jens Hilscher ◽  
Sharon Peleg Lazar ◽  
Alon Raviv
Keyword(s):  
Risk Shifting ◽  
Contingent Capital ◽  
Reduce Risk

Designing Bankers’ Pay: Using Contingent Capital to Reduce Risk-Shifting Incentives

2021 ◽  
pp. 2240005
Author(s):  
Jens Hilscher ◽  
Sharon Peleg Lazar ◽  
Alon Raviv
Keyword(s):  
Capital Structure ◽  
Convertible Bonds ◽  
Risk Shifting ◽  
Asset Risk ◽  
Contingent Capital ◽  
Risk Equity ◽  
Increase Risk ◽  
Reduce Risk ◽  
The Capital Structure

Including contingent convertible bonds (coco) in the capital structure of a bank affects the sensitivity to risk of its equity-based compensation. Such risk-shifting incentives can be reduced if the coco bonds are well-designed. Similarly, we show that compensating executives with well-designed coco bonds can also reduce risk-shifting incentives. In practice, however, most coco bonds have characteristics that result in both stock and coco compensation having large sensitivities to changes in asset risk — equity-based compensation encourages executives to increase risk, coco compensation to reduce risk. We show that a pay package combining both stock and coco can practically eliminate risk-shifting incentives and that it can be implemented with a bank’s preexisting coco bonds.

AF Ablation May Reduce Risk of Alzheimer's, Other Dementias

2010 ◽  
Vol 43 (10) ◽  
pp. 1-2
Author(s):  
BRUCE JANCIN
Keyword(s):  
Af Ablation ◽  
Reduce Risk

Treating Battered Women to Reduce Risk and Promote Resilience

2008 ◽  
Author(s):  
Dawn Johnson
Keyword(s):  
Battered Women ◽  
Reduce Risk

Statins May Reduce Risk of Colorectal Cancer

2005 ◽  
Vol 33 (2) ◽  
pp. 75
Author(s):  
ERIK L. GOLDMAN
Keyword(s):  
Colorectal Cancer ◽  
Reduce Risk

Flu Vaccine May Reduce Risk of Acute Asthma Episodes

2010 ◽  
Vol 40 (13) ◽  
pp. 59
Author(s):  
ROXANNA GUILFORD-BLAKE
Keyword(s):  
Acute Asthma ◽  
Flu Vaccine ◽  
Reduce Risk

Living Well to Keep Your Pressure Down

EDIS ◽  
2017 ◽  
Vol 2017 (6) ◽  
Author(s):  
Linda B. Bobroff
Keyword(s):  
Risk Factors ◽  
Blood Pressure ◽  
Blood Vessels ◽  
High Blood Pressure ◽  
Health Problems ◽  
Fact Sheet ◽  
Living Well ◽  
Heart Work ◽  
Major Revision ◽  
Reduce Risk

High blood pressure, or hypertension, can cause serious health problems. It makes your heart work harder and can damage your blood vessels even if you feel okay. Everyone should have their blood pressure checked regularly. If you have certain risk factors, you are more likely to have high blood pressure. This 6-page fact sheet is a major revision that discusses risk factors and ways to reduce risk.

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