Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84292
Authors: 
Apreda, Rodolfo
Year of Publication: 
2010
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA: Área: finanzas 421
Abstract: 
This research paper brings forward a non-standard convertible zero-coupon bond endowed with a set of distinctive features attached to it so as to strengthen the corporate governance of the issuer, namely that conversion actually takes place at maturity date only; that conversion is mandatory; it offers investors a pay-off function tailored to match the conversion; there is no call provision whatsoever; it is suitable for private or public placements; credit-risk rating is of the essence and, lastly, it requires from the company a track record statement on behalf of investors. Although this sort of bond actually provides the company with a powerful financing vehicle, we argue that it could also play a constructive role if it were used in compensation packages for rewarding both senior managers and the Board of Directors.
Subjects: 
zero-coupon bond
convertible bond
corporate governance
covenants
compensation packages
track record statement
JEL: 
G34
G32
G11
G12
Document Type: 
Working Paper

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