Literature Review Women on boards and in TMTS and firm performance126 ted categories proactive and reactive strategy The logic behind this categorization is that given reasons such as efficiency increase cost reduction or implementation of new technologies are viewed as proactive strategies whereas layoffs in response to a fall in demand weak market sector conditions and poor past financial performance are seen as reactive strategies Capelle Blancard Tatu 2012 Lee 1997 Other studies strive to objectify this assessment by clear criteria e g sales growth pro active versus sales decline reactive during the year prior to the announcement Fraunhoffer et al 2014 Proactive layoffs are likely to have a positive im pact on future cash flows Moreover they may be an indication for a prudent strategically acting management team which anticipates changes in the environment McKnight Lowrie Coles 2002 Investors should thus consider proactive layoffs as a positive sign Reactive layoffs in contrast con vey new information on potentially critical market conditions and a firm s difficult financial situation They can be perceived as a sign for management s poor assessment of market development and its inability to cope with uncertainties Shareholders will likely view reactive layoffs as a negative sign Empirical evidence indeed points to a different assessment of both strategies by capital markets Stock market reaction to reactive strategies tends to be negative and statistically significant Ca pelle Blancard Tatu 2012 Elayan 1997 Hahn Reyes 2004 Lee 1997 McKnight et al 2002 Neus Walter 2009 Market reactions to proac tive strategies tend to be positive Capelle Blan card Tatu 2012 Fraunhoffer et al 2014 Hahn Reyes 2004 McKnight et al 2002 or at least less negative Lee 1997 although in some cases statistically insignificant McKnight et al 2002 Lee 1997 Hypothesis 1 Stock price reaction will be positiveto proactive layoffs and negative to reactive layoffs Gerpott 2007 points out the methodological weaknesses in operationalizing strategic thrusts or reasons Problems may occur due to a signifi cant amount of imprecision in announcements and most likely a high degree of overlap Layoffs defined as proactive often contain elements that theoretically indicate a reactive layoff The need for cost reduction and improvements in efficiency for instance is closely if not inseparably linked with most other reasons e g Iqbal Shetty 1995 Farber and Hallock 2009 define three catego ries of reasons for layoffs namely reorganization plant closing and cost issues Other scholars ex tend the range of stated reasons up to four such as non profitable operations restructuring labor management dispute and discontinued opera tions products Elayan et al 1998 Hillier et al 2007 classify stated reasons for layoffs into six major categories reorganization plant branch closure poor performance fall in demand cost cutting and merger or acquisition Additional re dundancy reasons of relevance may be techno logical innovation Madura et al 1995 increased competition Brookman Chang Rennie 2007b or offshoring outsourcing Marshall et al 2012 It should be further noted that some announcing firms cite a variety of reasons thus preventing an unambiguous classification while other firms do not provide any specific reasons for the planned layoffs Reorganization cost reduction Reorganization efforts and cost reductions are likely to produce benefits and increase efficiency Empirical evidence shows that investors react less negatively Elayan et al 1998 or even positively Layoffs and shareholder wealth

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 126
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