Vladimir Vladimirov

University of Amsterdam
Finance Group
Plantage Muidergracht 12
1018 TV Amsterdam, Netherlands
Tel: +31 20 5257317
E-mail: vladimirov AT uva.nl

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FINANCING BIDDERS IN TAKEOVER CONTESTS
Journal of Financial Economics 117(3), September 2015, 534557. (download/ from journal)
EFA Annual Meeting 2012
Abstract
This paper argues that endogenizing the choice of financing for cash bids is just as important as endogenizing the payment method in takeovers. The paper shows that acquirers issue equity to finance their cash bids only if they lack access to competitive financing. This leads to underbidding and lower takeover premiums. The opposite holds for debt financing, which leads to overbidding. Endogenizing the payment method reveals that equity bids carry lower premiums than cash bids financed at competitive terms. The model's insights find preliminary empirical support and could help explain existing evidence, which seems at odds with prior theory.
   
 
INDIRECT COSTS OF FINANCIAL DISTRESS AND BANKRUPTCY LAW: EVIDENCE FROM TRADE CREDIT AND SALES with Zacharias Sautner
Review of Finance, forthcoming (download/ from journal)
AFA Annual Meeting 2014, EFA Annual Meeting 2009
Abstract
We argue that stronger debt enforcement in bankruptcy can reduce indirect costs of financial distress: (i) by increasing the likelihood of restructuring outside bankruptcy and (ii) by improving the recovery rate of stakeholders, such as trade creditors, through explicit legal provisions. Consistent with these predictions, we find that when debt enforcement is stronger, financially distressed firms are less exposed to indirect distress costs in the form of reduced access to trade credit and forgone sales. We document these effects in a panel of firms from 40 countries with heterogeneous debt enforcement characteristics and in differences-in-differences tests exploiting several recent bankruptcy reforms.
   
 
GROWTH FIRMS AND RELATIONSHIP FINANCE: A CAPITAL STRUCTURE APPROACH
with Roman Inderst
Management Science, accepted (download)
AFA Annual Meeting 2014
Abstract
We analyze how relationship finance, such as venture capital and relationship lending, affects growth firms' capital structure choices. We show that relationship investors that obtain a strong bargaining position due to their privileged information about the firm, optimally cash in on their dominance by pushing it to finance follow-up investments with equity. The firm underinvests if its owner refuses to accept the associated dilution. However, this problem is mitigated if the firm's initial relationship financing involves high leverage or offers initial investors preferential treatment in liquidation. By contrast, if initial investors are unlikely to gain a dominant position, firms optimally lever up only in later rounds. Our implications for relationship and venture capital financing highlight that the degree of investor dominance is of key importance for growth firms' capital structure decisions.
   
 
(NON-)PRECAUTIONARY CASH HOARDING AND THE EVOLUTION OF GROWTH FIRMS
with Arnoud Boot
Management Science, accepted (download)
AFA Annual Meeting 2016, AEA Annual Meeting 2015
Abstract
We analyze whether growth firms should delay current investment to hoard cash in order to reduce dilution from external financing. This hoarding motive is the natural counterpart to saving cash as a precaution to help secure funding for future investment opportunities. However, the two motives lead to fundamentally different implications for hoarding and for how cash interacts with key financial and investment decisions. In particular, our paper contributes to understanding why firms choosing private over public financing hoard less, and why product market competition has an ambivalent impact on the public-private choice.
   
 
CONTRACT HORIZON AND TURNOVER
(download)
AFA Annual Meeting 2018
Abstract
This paper develops a model in which a principal hires agents whose fit with the firm changes over time. Agents are better informed about such changes, so the principal must decide how to elicit information that could lead to an agent's dismissal. The paper rationalizes the use of renewable fixed-term contracts as a mechanism that periodically switches from relying on severance pay to relying on firm performance on renewal dates to sort out agents. The paper's key implications focus on the determinants of contract horizon. Furthermore, it sheds light on several puzzling stylized facts concerning hiring and replacement practices.
   
 
COLLUSION WITH PUBLIC AND PRIVATE OWNERSHIP AND INNOVATION
with Arnoud Boot
(download)
SFS Cavalcade 2018
Abstract
We argue that public ownership gives firms the option to collude and engage in rent seeking on existing technologies. While this option can enhance firm value, it also reduces the commitment to develop new technologies. We show that the option to collude is valuable when innovation is either not attractive or very attractive, resulting in a U-shaped relation between the attractiveness of innovation and the preference for public ownership. Control via equity stakes could also facilitate rent seeking, but is an imperfect substitute. The main predictions of our model are consistent with empirical patterns and shed light on several puzzling stylized facts.
   
 
PRESERVING 'DEBT CAPACITY' OR 'EQUITY CAPACITY': A DYNAMIC THEORY OF SECURITY DESIGN UNDER ASYMMETRIC INFORMATION (2012)
with Roman Inderst
(download)
4th Paris Spring Corporate Finance Conference
Abstract
In a dynamic model of optimal security design, we show when firms should preserve "equity capacity" through choosing high target leverage or "debt capacity" through choosing low target leverage. Thereby, firms reduce a problem of underinvestment or overinvestment when they must raise future financing under asymmetric information. Which problem arises depends on whether additional financing is raised at competitive terms or whether there is a lock-in with initial investors. Firms initial (or target) capital structure matters as it affects the "outside option" of both insiders and outside investors. Our theory also entails implications for start-up and venture capital financing.