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Vladimir Vladimirov

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

HOME   CV   RESEARCH   TEACHING
 
FINANCING BIDDERS IN TAKEOVER CONTESTS
Journal of Financial Economics 117(3), 2015, 534-557.
EFA Annual Meeting 2012

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 22(5), 2018, 1667-1704.
AFA Annual Meeting 2014, EFA Annual Meeting 2009

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 PERSPECTIVE
with Roman Inderst
Management Science 65(11), 2019, 5411-5426.
AFA Annual Meeting 2014

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 65(11), 2019, 5290-5307.
AFA Annual Meeting 2016, AEA Annual Meeting 2015

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 LENGTH AND SEVERANCE PAY
AFA Annual Meeting 2018

Renewable fixed-term contracts are widespread in executive compensation. This paper studies why these contracts are optimal, what determines their length, and how that length affects managerial behavior. The model relates a contract's length to the period during which dismissing a manager triggers severance pay. Though longer contracts are more costly to terminate, their severance protection can discourage managers from trying to avoid replacement through window dressing or concealing soft information. Thus, the board's choice of contract length balances higher replacement costs with a higher likelihood of window dressing. The predicted determinants of contract length and severance pay are supported empirically.

 
CO-OPETITION AND DISRUPTION WITH PUBLIC OWNERSHIP
with Arnoud Boot
SFS Cavalcade 2018, EFA Annual Meeting 2018

Do mandatory disclosure requirements make public firms less disruptive and competitive? We offer a new perspective by showing that mandatory disclosure helps when firms engage in "co-opetition" --- a strategy of competing on some dimensions while avoiding competition on others. Co-opetition can elevate profitability, lower financing costs, and encourage disruption. This benefit is most pronounced in growth industries where rivals also pursue disruption. The cost is that cooperation on existing technologies may erode commitment to disruptive investments. This cost mainly encumbers intermediately-attractive investments in mature industries. Our insights explain evidence of higher profitability in public firms following stricter disclosure requirements.

 
FINANCING SKILLED LABOR
WFA Annual Meeting 2019, Cambridge Corporate Finance Theory Symposium

This paper studies how negotiations to hire skilled workers affect workers' compensation structure and firm financing. It shows that firms with strong bargaining power offer fixed wages, secured by a credit line. By contrast, firms trying to accommodate workers' demands offer equity-based compensation. The model highlights two main factors affecting workers' compensation structure and firm financing. The first is workers' ability to play firms --- often making different types of offers --- off against each other. The second is that workers' compensation structure affects the risk that workers want to leave when others are leaving. The evidence supports the model's main predictions

 
HOW FINANCIAL MARKETS CREATE SUPERSTARS
with Spyros Terovitis

This paper shows that manipulative trading by speculators can create value for shareholders by simulating a "buzz" around a firm and turning it into a star. The speculators' profit comes from helping the firm attract stakeholders, such as high-quality employees and business partners, that would have otherwise not worked with it. Thus, price manipulation leads to a misallocation of talent and resources. Similar to speculators, investors in primary markets can benefit from inflating firms' valuations to unicorn status if that helps attract stakeholders. Opportunities for manipulation are asymmetric, as firms can encourage manipulation benefiting them and discourage manipulation harming them by adjusting their corporate governance and transparency.

 
BUYING A SEAT AT THE TABLE: BANKRUPTCY LAW AND DISTRESS INVESTING
with Mike Burkart and Samuel Lee

Private equity and hedge funds are involved in the vast majority of large bankruptcy cases, often contributing to more efficient reorganizations. We show that bankruptcy provisions allowing multiple claims classes to file a reorganization plan in bankruptcy play a crucial role. Such provisions offer activist investors multiple entry points in pre-bankruptcy trading through which they can subsequently affect bankruptcy reorganization. The resulting uncertainty about which distressed claims activists will target in pre-bankruptcy trading mitigates "free-rider" pricing, which would otherwise make acquiring such claims unattractive. Distressed firms with more complex capital structures and a high likelihood of entering bankruptcy are particularly attractive for activists. Our predictions rationalize the main stylized facts about distress investing.

 
WHY DO INSTITUTIONAL INVESTORS INVEST THROUGH INTERMEDIARIES?

Institutional investors, such as pension funds, often lack direct access to deals they want to invest in, forcing them to spend billions of dollars on intermediation fees. This paper explains intermediaries' better access to deals with their ability to maintain a reputation for isolating firms from investors' potentially differing strategic objectives. Maintaining such a reputation requires intermediaries to charge non-trivial fees, with competition putting upward pressure on fees. While institutional investors' in-house teams may also develop a reputation, they find it harder. When they do, the proportion of directly invested capital is "wave-shaped" in investors' size. Evidence from institutional investors' investments in alternative assets supports the model's predictions.