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

Rodolfo Apreda ()

No 260, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

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.

Keywords: preferred stock; convertible preferred stock; corporate governance; control rights; compensation scheme. (search for similar items in EconPapers)
JEL-codes: G34 G11 G10 (search for similar items in EconPapers)
Date: 2004-04
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Persistent link: http://EconPapers.repec.org/RePEc:cem:doctra:260

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