Literature Review Women on boards and in TMTS and firm performance 119 sectors the financial sector assumes a special position Financial services are not low skill but rather sophisticated services Job opportunities for low qualified and low paid workers are in fact scar ce thereby giving rise to the average salary level It could also be argued that employees in banking raise manage and move enormous sums of money and thus bear great responsibility Yet persisting notably high salary levels in the financial sector remain a controversial issue particularly since in vestment bankers worldwide played a crucial role in causing the recent global financial crisis 5 3 L i terature review and hypotheses development 5 3 1 Theoretical considerations I build upon the pure efficiency hypothesis and the decreased demand hypothesis presented by Lin and Rozeff 1993 and empirically supported by Palmon Sun and Tang 1997 According to the efficiency hypothesis the market response will be neutral or positive for layoffs which investors regard as efficiency enhancing Positive changes in utilization and organization cost structures and processes are to be expected Viewed in isola tion layoffs as a cost cutting measure induced by decreased demand should benefit shareholders and give rise to the share price because this deci sion improves wealth to reduce costs Lin Rozeff 1993 In combination with fallen demand howe ver the effect is a reduced level of net cash flows and a lower share price because decreased de mand results in lower sales und thus rising costs in the short term and subsequently costs are at best restored to their original level Lin Rozeff 1993 Therefore the decreased demand hypothesis pre dicts a negative market response Lin and Rozeff show that layoff announcements are associated with negative share price reactions which provi des support for the decreased demand hypothesis Palmon Sun and Tang 1997 provide support for both hypotheses as they find negative abnormal returns for firms that announce dismissals that are motivated by decreased demand and positive ab normal returns for firms that announce staff cuts that are motivated by efficiency improvement Elayan et al 1998 similarly build upon the effi ciency hypothesis but compare it with the decli ning investment opportunities hypothesis The declining investment opportunities hypothesis predicts a negative market response if a layoff an nouncement provides negative information about a firm s future perspectives and shareholders thus view the planned redundancies as indicator for a worse than expected operating performance and poor investment opportunities Announcement effects of the total sample suggest that announ cements of staff cuts reveal negative information about a firm consistent with the declining invest ment opportunities hypothesis Elayan et al 1998 Overall previous empirical findings on capital markets reaction to announcements of planned redundancies show a clear tendency The majo rity of 48 publications on layoff announcements effects using the event study method analyzes announcements across several industries and in a particular geographical region Only very few stu dies focus on a particular industry On the whole capital markets respond to layoff announcements with significant negative abnormal returns in nar row event windows around the announcement date e g Chen Mehrotra Sivakumar 2001 Hallock 1998 Lee 1997 Wertheim Robinson 2000 When focusing on financial institutions fin dings are inconsistent Some older empirical evi dence suggests that announcing firms experience a Layoffs and shareholder wealth

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 119
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