Literature Review Women on boards and in TMTS and firm performance120 negative and significant share price reaction Madura Akhigbe Bartunek 1995 Elayan et al 1998 hence supporting the decreased demand or declining investment opportunities hypothesis More recent evidence points in the opposite direction By indicating that announcing banks on average experience a positive and significant share price reaction it supports the efficiency hypothesis Cagle Sen Pawlukiewicz 2009 Other findings provide support for both concepts as share price reactions differ depending upon the investigation period In pre crisis years 2005 06 banks and financial services experience a positive but not significant share price reaction whereas returns are strongly negative and highly significant in crisis year 2008 Marshall et al 2012 Empirical evidence further suggests that the layoff size the stated reason for the planned redundan cies as well as stock market conditions at the an nouncement date constitute factors that influence direction and magnitude of the share price reac tion Findings suggest that market reactions to lar ge layoffs are stronger and more negative than to small layoffs Elayan et al 1998 Hillier Marshall McColgan and Werema 2007 Worrell Davidson Sharma 1991 Numerous studies classify the pro vided reasons for the planned dismissals into the groups proactive strategies and reactive strate gies whereby the definitions may vary Mergers and acquisitions or restructuring of the organiza tion for instance can be considered as proactive strategies whereas a fall in demand or poor past financial performance can be classified as reactive strategies Stock market reaction to reactive stra tegies tends to be negative and statistically signi ficant e g Capelle Blancard Tatu 2012 Elayan et al 1998 Lee 1997 Neus Walter 2009 whe reas market reactions to proactive strategies tend to be positive e g Fraunhoffer et al 2014 Hahn Reyes 2004 McKnight Lowrie Coles 2002 Moreover the number of layoff announcements closely follows the general business cycle Farber Hallock 2009 Dismissals during declining markets are likely to be perceived as reactive to economic conditions and poor prospects By contrast staff cuts during economic expansion and rising markets are rather perceived as proactive and efficiency en hancing Indeed market reaction tends to be po sitive during rising stock markets and negative in declining markets Marshall et al 2012 5 3 2 Shareholder wealth effects of reduc tions in workforce announcements Corporate finance research has been dealing inten sively with the effect of corporate announcements of staff downsizing on shareholder wealth Since the early 1990s scholars have examined the ef fects of announcements of large scale reductions in workforce on the share price of stock listed cor porations and potential explanatory factors for the observed stock price reactions Gerpott 2007 identifies a total of 37 publications on layoff announcements effects using the event study method that cover the investigation period January 1978 to August 2001 The vast majority of studies 25 focuses on the Anglo Saxon area i e the United States and the United Kingdom On the whole capital markets respond to layoff announcements with significant negative abnormal returns in narrow event windows around the an nouncement date The fact that such notifications on average are not followed by positive abnormal returns suggests that the potential for economic benefits such as cost reductions and subsequent increases in profitability eventually increasing free cash flows and thus shareholder wealth is not ack nowledged by the stock markets Instead announ cements of planned redundancies in their typical Layoffs and shareholder wealth

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 120
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