Inside Debt, Contingent Convertible Bonds, and Capital Structure

• Main Authors: Kung, Chun-Chan, 龔群旃
• Other Authors: Huang, Hsing-Hua
• Format: Others
• Language: en_US
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/et6czm

碩士 === 國立交通大學 === 財務金融研究所 === 105 === The recent financial crisis leads researchers to focus on contingent capital. There are a lot of reason caused financial crisis. Managers’ wealth is one of the important element caused financial crisis. In this paper, we provide a framework to analysis firm’s capital structure with the presence of inside debt and contingent convertible bonds. Our main analysis focus on the agency problem when issue contingent convertible bonds and inside debt. We show that if managers and shareholders can make investment decision, they will raise more fund from CoCo bonds rather than straight debt and result in agency problem. The presence of inside debt will reduce the incentive of managers to take risk.