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| Author: | Palmon, O. Sun, H-L. Tang, A.P. |
| Title: | Lay-off announcements: Stock market impact and financial performance |
| Journal: | Financial Management
1997 : AUTUMN, VOL. 26:3, p. 54-68 |
| Index terms: | LAY-OFFS STOCK MARKETS FINANCIAL PERFORMANCE |
| Language: | eng |
| Abstract: | A layoff decision can be associated with either a decrease or an increase of firm value. Layoff decisions induced by adverse market conditions,should be associated with declines in sales and profitability measures. If layoff announcements convey new information regarding adverse market conditions, they might be associated with declines in firm values. Layoffs resulting from unexpected efficiency gains should be associated with increased sales, improved profitability measures, and higher firm values. Negative abnormal returns were found for firms that announce layoffs motivated by declining demand, and positive abnormal returns for firms announcing layoffs motivated by efficiency improvement. The reasons cited in announcements are used as signals that help interpret the impact of layoff decisions on firm values. |
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