Vijay Yerramilli
John H. Duncan Professor of Finance
C. T. Bauer College of Business
University of Houston

Contact information:
240D, Melcher Hall
University of Houston
Houston, TX 77584
Phone: (713) 743-2516
Fax: (713) 743-4789

SSRN page:

Vita: Click here


"Do Sunk Costs Affect Prices in the Housing Market?" (with Dimuthu Ratnadiwakara)
Forthcoming, Management Science

"Seed-Stage Success and Growth of Angel Co-investment Networks" (with Buvaneshwaran Venugopal)
Forthcoming, Review of Corporate Finance Studies
(Here's the Internet Appendix)

"Monitoring in Originate-to-Distribute Lending: Reputation versus Skin in the Game" (with Andrew Winton)
Forthcoming, Review of Financial Studies
(Here's the Internet Appendix)

"Optimal Capital Structure and Investment with Real Options and Endogenous Debt Costs" (with Praveen Kumar)
Review of Financial Studies, 2018, Vol. 31, pp. 3452--3490

"Uncertainty, Capital Investment, and Risk Management" (with Hitesh Doshi and Praveen Kumar)
Management Science, 2018, Vol. 64, pp. 5769--5786
(Here's the Internet Appendix)

"Debt Maturity Structure and Credit Quality" (with Radhakrishnan Gopalan and Fenghua Song)
Journal of Financial and Quantitative Analysis, 2014, Vol. 49, pp. 817--842

"Market Efficiency, Managerial Compensation, and Real Efficiency" (with Rajdeep Singh)
Journal of Corporate Finance, 2014, Vol. 29, pp. 561--578

"Stronger Risk Controls, Lower Risk: Evidence from U.S. Bank Holding Companies" (with Andrew Ellul)
Journal of Finance, 2013, Vol. 68 (5), pp. 1757--1803
(Here's the Internet Appendix)

"Moral Hazard, Hold-up, and the Optimal Allocation of Control Rights"
RAND Journal of Economics, 2011, Vol. 42 (4), pp. 705--728

"Does poor performance damage the reputation of financial intermediaries? Evidence from the loan syndication market"
(with Radhakrishnan Gopalan and Vikram Nanda)
Journal of Finance, 2011, Vol. 66 (6), pp. 2083--2120

"Why do Firms Form New Banking Relationships?" (with Radhakrishnan Gopalan and Gregory F. Udell)
Journal of Financial and Quantitative Analysis, 2011, Vol. 46 (5), pp. 1335--1365

"Entrepreneurial Finance: Banks versus Venture Capital" (with Andrew Winton)
Journal of Financial Economics, 2008, Vol. 88 (1), pp. 51--79

"The effect of decimalization on the components of the bid-ask spread" (with Scott Gibson and Rajdeep Singh)
Journal of Financial Intermediation, 2003, Vol. 12, pp. 121--148

Completed Working Papers:

"Effect of Bank Mergers on the Price and Availability of Mortgage Credit" (with Dimuthu Ratnadiwakara)
Abstract: Acquiring banks which gain large local market shares charge higher interest rates on non-agency mortgages after the acquisition compared to non-acquiring banks in the same local market, and this effect is stronger for subprime and Alt-A loans compared to prime loans. The corresponding effects for mortgages sold to Fannie Mae and Freddie Mac are economically insignificant. Acquiring banks also decrease approval rates for FHA mortgage applications, especially for low-income and non-white applicants, but increase approval rates for relatively safer conventional mortgages. Overall, our results indicate that the effect of bank mergers on the price and availability of mortgage credit vary by borrower risk, income, and race.

"Firm Size and Sensitivity to Industry versus Aggregate Business Cycles" (with Praveen Kumar)
Abstract: This paper examines the differential responses of firms' investment and financing policies to industry versus aggregate business cycles in the presence of financing frictions. Strikingly, large firms are more sensitive to their industry business cycles compared to smaller firms, whereas small firms exhibit greater sensitivity to the aggregate cycle. Our results are consistent with predictions from a dynamic model in which firms respond to separate industry-specific and aggregate shocks, where large firms have superior real and financial ability to exploit industry-specific profit shocks, and the severity of financial frictions and the risk-free rate are driven by aggregate shocks.

"Non-Executive Directors at Early-Stage Startups" (with Buvaneshwaran Venugopal)
Abstract: We document substantial variation across startups in whether and when they appoint non-executive directors, and the type of directors they appoint. The startup-director match depends on professional connections and individual experience profiles. Early-stage investors are more likely to serve as non-executive directors when there is a local scarcity of directors. Non-executive directors leverage their professional connections to attract new investors, directors, top executives, and potential acquirers for startups. Overall, presence of an early-stage non-executive director is associated with better funding outcomes and higher probability of exit through IPO, although presence of an investor-director makes exit via acquisition more likely.

"Reference Prices, Relative Misvaluation, and the Timing of M&A Announcements" (with Sangwon Lee)
Abstract: The bidder's relative value with respect to the target (RV) and its 52-week reference values affect who bids for whom, the timing of deal announcement, offer terms, and the likelihood of deal completion. Deals that are announced when the RV is near its 52-week high feature more stock payment, higher offer premium relative to the target's pre-announcement price but a larger discount relative to the target's 52-week high price, result in more negative announcement returns for the bidding firm in both the short and long run, and are less likely to be completed. Yet, bidders in such deals also experience large and positive abnormal returns over the period from private initiation of discussions with the target to twelve months after announcement. Our results suggest that bidders use past values of RV as reference points to assess relative misvaluation and to strategically choose announcement timing.

Other Links:

Bauer M.S. in Finance Program

The Finance Department

C. T. Bauer College of Business