Literature Review Women on boards and in TMTS and firm performance 125 staff cuts as being in the interest of shareholders rather than announcements of the other subgroups Cagle et al 2009 Marshall et al 2012 exami ne announcements of UK listed stock corporations including financial institutions from 2005 to 2006 and in 2008 Their total sample consists of 143 an nouncements thereof 19 by banks and financial services providers By consideration of two distinct time periods namely pre crisis years versus the year of the global financial crisis the study aims at determining differences in the reaction in de pendency on general financial market conditions Marshall et al refer to Farber and Hallock 2009 who note that the frequency of redundancies is closely associated with the general business cycle The number of dismissals will thus most likely in crease during the crisis In reference to the efficien cy hypothesis market reaction to layoffs assessed as efficiency enhancing is expected to be neutral or positive According to the declining investment hypothesis market reaction to layoffs indicating poor investment opportunities is expected to be negative Whereas the pre crisis cross sector ana lysis reveals a positive market reaction during the three day event window around the announce ment the market response in crisis year 2008 is clearly negative Concentrating on banks and fi nancial service providers pre crisis average return is positive in the three day event window and in the five day event window 0 78 percent but not significant In the year of the crisis however the negative impact on financial institutions is nota bly stronger than that on other industry sectors Banks and financial services experience a highly significant and negative CAAR of 6 99 percent in the 1 1 day event window and 10 58 percent in the 2 2 event window Evidence indicates that share price reaction in fact varies with stock market conditions Marshall et al 2012 5 3 3 Explanatory factors for effect variations 5 3 3 1 Reasons for layoffs Layoff announcements serve as a signal for a company s financial situation and capital markets seem to be sensitive to the reasoning behind the planned redundancies Worrell et al 1991 The firm s motivation for the layoffs is thus found to have a crucial impact on the share price reaction following such announcements The substantive reasons for reductions in staff provided by the announcing firm are the most re searched subject in 32 publications analyzed by Gerpott 2007 and also in those 11 reviewed in the present paper 30 studies investigate the stra tegic thrust behind the planned layoffs 20 of them operationalize it solely or in addition to a more detailed distinction as a dichotomous variable These studies distinguish between only two main types of motivation for instance efficiency enhan cement versus declining demand Palmon et al 1997 similarly restructuring versus low demand Hahn Reyes 2004 or improved efficiency ver sus other reasons Cagle et al 2009 Five studies in Gerpott and four recent studies published after 2006 Capelle Blancard Tatu 2012 Fraunhoffer et al 2014 Knauer Lachmann 2011 Neus Walter 2009 use a dichotomous variable to diffe rentiate between proactive and reactive stra tegic corporate behavior Proactive vs reactive strategy One possible distinction is to define a proactive strategy as realizing hidden efficiency reserves and a reactive strategy as reducing overcapacities given declining markets Neus Walter 2009 Proactive layoffs can be defined as an element of an over riding strategy reactive layoffs as reaction to poor financial performance Lee 1997 Several studies group reasons together and label the newly crea Layoffs and shareholder wealth

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 125
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