Enhancing corporate governance with one-and two-tiered convertible preferred stock
AbstractThis paper sets out a proposal by which two distinctive and new types of preferred stock (one- and two-tiered convertibles) could be used to sharpen up a company's governance. Firstly, the framework of analysis for standard preferreds will be outlined, mainly their valuation, underlying incremental cash flows, control rights and contractual features. Secondly, one - and two - tiered convertible preferred are introduced, setting up their financial design, how they convey control rights and contractual characteristics, and giving heed to a simple valuation for those preferreds. Last of all, it will be shown how the one- and twotiered convertibles come in handy to deal with some particular governance topics: capital structure, debt refinancing and compensation schemes for management.
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Bibliographic InfoPaper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 260.
Date of creation: Apr 2004
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preferred stock; convertible preferred stock; corporate governance; control rights; compensation scheme.;
Find related papers by JEL classification:
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-07 (All new papers)
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