Literature Review Women on boards and in TMTS and firm performance 127 to layoff announcements related to restructuring efforts Hahn Reyes 2004 and also positively when the reason given is an efficiency gain Pal mon et al 1997 Stock price reaction tends to be less negative given the stated reason is cutting costs instead of unprofitable operations Elayan et al 1998 Plant branch closure Research on plant closures has shown that respec tive announcements allow for conclusions regar ding the firm s financial and competitive position as problems causing the closing may affect the firm s entire operations Gombola Tsetsekos 1992 Diminishing demand or production costs as underlying causes support the declining inves tment hypothesis Shareholders may be driven to revise their expectation for future cash flows downwards Gombola and Tsetsekos 1992 show that firm wide problems become apparent in re duced profitability in conjunction with a drop in employment asset acquisition and dividend growth in the announcement year and the follo wing year Poor financial performance is consistent with an observed negative stock price reaction to the notification Negative reactions are more pro nounced if the closings concern large size plants The situation is different with regard to the finan cial services sector as there are no production si tes but only branches Branch closures in the ban king sector are often part of internal restructuring strategies or a result from mergers and acquisi tions Madura et al 1995 a consequence from the withdrawal from particular markets and bu siness areas or lacking efficiency of the branches concerned Moreover jobs in banking may beco me superfluous due to technological innovation Madura et al 1995 During the past years the change from analog banking with direct customer contact at the branch towards internet based di gital banking has picked up pace Hence branch networks are being continually downsized while online banking services are further expanded with the aim to prepare the banks structures for the future ECB 2015 Withdrawals from unprofitable markets elimination of overlapping capacities and closures of loss making branches should generally serve to enhance efficiency and are likely to be assessed positively by capital markets Mergers and acquisitions Redundancies usually occur following mergers and acquisitions Reduction of these redundancies is necessary in order to ensure cost and efficiency op timization Synergy costs savings may be obtained It can be assumed that market participants expect layoffs as a consequence of mergers and that ef fects have thus already been largely factored into market prices Fraunhoffer et al 2014 Knauer Lachmann 2011 at the time of the merger or acquisition announcement Poor performance Poor financial performance may be given as a rea son for layoffs by the announcing firm itself Poor financial performance can also be defined based on financial performance measures for example by either a significant decrease in earnings per share EPS or negative EPS Worrell et al 1991 below industry average ROE net income or sales per employee Elayan et al 1998 or negative ROE in conjunction with a recent bond downgrade Iq bal Shetty 1995 All definitions usually refer to one or two years prior to the announcement date Empirical evidence regarding the influence of a firm s financial position on investors perception of layoffs is contradictory Hillier et al 2007 and Chen et al 2001 show that layoff announcing Layoffs and shareholder wealth

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