Ludolph, MelinaLeibniz-Institut für Wirtschaftsforschung Halle2025-05-302023kxp: 1858121841https://epflicht.bibliothek.uni-halle.de/handle/123456789/129681858121841urn:nbn:de:gbv:3:2-9822233270509This paper examines the effect of CoCo bonds that qualify as additional tier 1 capital on bank fundamentals. The results reveal a significant reduction in the distance to insolvency following the hybrid bond issuance due to increased earnings volatility. Further analyses suggest a link between CoCo issuance and more active earnings management, evidenced by a higher standard deviation of loan loss provisions and impairment charges. The findings substantiate long-standing theoretical hypotheses suggesting that the regulatory design requirements for going-concern CoCos adversely affect bank stability. Furthermore, they correspond to the notion that private monitoring is largely absent as a corrective measure due to prevailing uncertainties and information frictions.1 Online-Ressource (III, 60 Seiten, 1,43 MB) : Diagrammeenghttp://rightsstatements.org/vocab/InC/1.0/330Book