Enhancing corporate governance with one-and two-tiered convertible preferred stock

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Enhancing corporate governance with one-and two-tiered convertible preferred stock

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Rodolfo Apreda

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Rodolfo Apreda

Abstract

This 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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Paper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 260.

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Date of creation: Apr 2004
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Handle: RePEc:cem:doctra:260

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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)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Kaplan, Steven & Strömberg, Per Johan, 2000. "Financial Contracting Theory Meets The Real World: An Empirical Analysis Of Venture Capital Contracts," CEPR Discussion Papers 2421, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Steven N. Kaplan & Per Stromberg, 2000. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," NBER Working Papers 7660, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Steven N. Kaplan & Per Strömberg, 2000. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," CRSP working papers 513, Center for Research in Security Prices, Graduate School of Business, University of Chicago. [Downloadable!]
- Steven N. Kaplan & Per Stromberg, 2003. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 281-315, 04. [Downloadable!] (restricted)
Arnold R. Cowan, 1996. "Convertible Exchangeable Preferred Stock," Finance 9606001, EconWPA, revised 12 Aug 1996. [Downloadable!]
Keith D. Harvey & M. Cary Collins & James W. Wansley, 2003. "The Impact of Trust-Preferred Issuance on Bank Default Risk and Cash Flow: Evidence from the Debt and Equity Securities Markets," The Financial Review, Eastern Finance Association, vol. 38(2), pages 235-256, 05. [Downloadable!] (restricted)
Oliver Hart, 2001. "Financial Contracting," NBER Working Papers 8285, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Oliver Hart, 2001. "Financial Contracting," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1079-1100, December. [Downloadable!] (restricted)
Rodolfo Apreda, 2002. "Incremental cash flows, information sets and conflicts of interest," CEMA Working Papers: Serie Documentos de Trabajo. 220, Universidad del CEMA. [Downloadable!]
Sorensen, Eric H. & Hawkins, Clark A., 1981. "On the Pricing of Preferred Stock," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(04), pages 515-528, November. [Downloadable!]
Rodolfo Apreda, 2003. "THE SEMANTICS OF GOVERNANCE. (The common thread running through corporate, public, and global governance.)," CEMA Working Papers: Serie Documentos de Trabajo. 245, Universidad del CEMA. [Downloadable!]
Rodolfo Apreda, 2002. "How corporate governance and globalization can run afoul of the law and good practices in business: The Enron's disgraceful affair," CEMA Working Papers: Serie Documentos de Trabajo. 225, Universidad del CEMA. [Downloadable!]
Oliver Hart, 2001. "Financial Contracting," Harvard Institute of Economic Research Working Papers 1924, Harvard - Institute of Economic Research. [Downloadable!]

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Chisari, Omar O. & Ferro, Gustavo, 2009. "Gobierno Corporativo: los problemas, estado actual de la discusión y un ejercicio de medición para Argentina
[Corporate Governance: the problems, the current stage of the discussion and a measure," MPRA Paper 15630, University Library of Munich, Germany. [Downloadable!]

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