dhr. dr. T. (Tomislav) Ladika
Faculteit Economie en Bedrijfskunde
Plantage Muidergracht 12 Amsterdam
1001 NL Amsterdam
Assistant Professor of Finance, August 2012 - Present
Ph.D. in Economics, Brown University, May 2012
B.A. with Highest Honors, University of Michigan, Dec. 2005
Corporate Governance, Compensation Policies, Debt Restructuring, Financial Distress, Credit Default Swaps
By appointment in M3.25
Masters in International Finance: Investments (Block 1)
Masters in Business Economics and Finance: Valuation (Block 2)
Past Teaching Activities - UvA
Masters in International Finance: Investments (2012, 2013)
Masters in Business Economics and Finance: Corporate Governance (2013)
Bachelor: Corporate Finance (2012, 2013)
Renegotiation or Bankruptcy? The Effects of Out-of-Court Costs on Distress Resolution (with Murillo Campello and Rafael Matta)
- 2014 Brazilian Econometric Society Best Paper Award
A recent change to the U.S. tax code (IRS Regulation TD9599) lowered the costs certain creditors incur when restructuring debt out of court. We use this setting to show how CDS spreads gauge the cost wedge between in- versus out-of-court distress resolution. CDS spreads declined by record figures on the regulation's announcement, with declines concentrated among distressed firms with higher ratios of syndicated loans -- the credit category treated by TD9599. Critically, distressed firm's loan renegotiation rates more than doubled, reducing their exposure to financial distress costs, which we estimate are up to 36% of firm value. Those firms' access to syndicated loans increased while associated interest markups declined.
The Retention Effects of Unvested Equity: Evidence from Accelerated Option Vesting (with Torsten Jochem and Zacharias Sautner)
We document that firms can effectively retain executives by granting deferred equity pay. We show this by analyzing a unique regulatory change (FAS 123-R) that prompted 720 firms to suddenly eliminate stock option vesting periods. This allowed CEOs to keep an additional $1.5 million in equity when departing the firm, and we find that voluntary CEO departure rates subsequently rose from 6% to 19%. Our identification strategy exploits FAS 123-R's almost-random timing, which was staggered by firms' fiscal year ends. Firms that experienced departures suffered negative stock price reactions, and responded by increasing compensation for remaining and newly hired executives.
Managerial Short-Termism and Investment: Evidence from Accelerated Option Vesting (with Zacharias Sautner)
- 2014 MIT Asia Accounting Conference Best Paper Award
We show that executives with more short-term incentives spend less on long-term investment. We examine a unique event in which hundreds of firms eliminated option vesting periods to avoid an accounting expense under FAS 123-R. This allowed executives to exercise options earlier and to profit from boosting short-term performance. Our identification exploits that FAS 123-R’s timing was staggered almost randomly by firms’ fiscal year ends. CEOs responded to option acceleration by cutting investment; they also increased equity sales and departed more frequently. Accelerating firms’ stocks initially rise, but then underperform over the long-term. Our findings support managerial myopia theories.
After selling firm equity, executives' incentives to maximize shareholder value may decrease. How do boards respond? Theory shows boards can restore executives' incentives by shifting subsequent pay from cash toward equity. Unobservable firm-level changes that cause executives to sell equity and simultaneously reduce their need for incentives may bias estimates. I therefore compare selling and non-selling executives at the same firm. I find that boards replenish only 7% of incentives after sales, allowing some executives to accumulate substantially fewer incentives than others. I show that boards may instead focus on benchmarking annual equity grants to those of peer firms.
Limited Attention to Detail: How Analysts' Valuations Change Following Mandatory Option Expensing (with Zacharias Sautner)
We show that financial analysts' valuations became less accurate and more pessimistic following a large drop in headline earnings that did not reveal new information about firm profitability. Regulation FAS 123-R required firms to begin expensing stock option compensation in the income statement, instead of disclosing costs only in financial statement footnotes. We test how this change in expense visibility affected analyst forecasts and stock recommendations. For identification, we exploit that FAS 123-R's compliance dates were staggered based on firms' fiscal year ends. Firms that began to expense options experienced larger analyst forecast errors and were one-third more likely to miss their consensus earnings forecast, relative to observationally similar firms that did not begin expensing options in the same year. Analysts also more often revised down their recommendations on these firms' stocks. As a result, affected firms experienced large drops in market value. Our results are consistent with the limited attention hypothesis that analysts and investors overvalue firms when value-relevant information is less accessible.
Work in Progress
The Consequences of Loan Renegotiation for Distressed Borrowers (with Murillo Campello, Janet Gao, and Rafael Matta)
The (Self-) Funding of Intangibles (with Robin Doettling and Enrico Perotti)
- Geen nevenwerkzaamheden