Literature Review Women on boards and in TMTS and firm performance136 definition of the event date is crucial but often difficult Farber Hallock 2009 I use the first announcement or report on a planned reduction in workforce by a bank from my predefined group However it is possible that information on the planned layoffs leaked through at an earlier point in time In this case the analysis will not capture the full impact of the staff cut announcements on share prices Farber Hallock 2009 The average abnormal return AAR in my sample with N observations is calculated for a event day τ using the following formula 3 AAR τ ARi τ 1 N i 1 N In order to calculate the cumulative abnormal re turn the daily abnormal returns of an event i are summed up over the event window τ1 τ2 This calculation reflects the change in asset value wi thin the event period Gerpott Jakopin 2006 Fraunhoffer et al 2014 4 CARi τ1 τ2 ARi τ τ2 τ τ2 Eventually the cumulative average abnormal re turn CAAR over all N announcements is calculated on the basis of the CARs of each announcement 5 CAARi τ1 τ2 CARi τ1 τ2 1 N i 1 N For evaluation of statistical significance I initially apply a t test as a parametric method In addition I adopt the parametric test method presented by Boehmer Masumeci and Poulsen 1991 in order to control for higher variances of stock returns in the event window induced by the layoff announ cements Furthermore I apply the non parametric rank test set out by Corrado 1989 and the Wilco xon Signed Rank Test The influence of announce ment and company specific factors on the direc tion and magnitude of the stock price reaction is examined by means of an OLS regression 5 6 Results 5 6 1 Univariate analysis of the announcement effect The first interest is directed at the question if an announcement of planned job cuts conveys infor mation which is new to shareholders and relevant to the valuation I strive to determine direction and magnitude of the stock price reaction as previous findings for layoff announcements by financial in stitutions are inconsistent Cumulative average abnormal returns CAARs for the total sample are clearly negative This result supports the declining investment opportunities hypothesis the announcements convey negative information on the issuers current status and per spectives Shareholders are pessimistic about the banks future prospects and anticipate a negative impact on cash flows They perform a downwards revaluation in response to the unexpected bad news My results are in line with the findings of Madura et al 1995 and Elayan et al 1998 and in contradiction to the results of Cagle et al 2009 Hypothesis 1 states that stock price reactions will be positive to proactive layoffs and negative to reactive layoffs Contrary to my expectations re turns are negative for both subsamples albeit in significant for proactive layoffs Thus the results do not support hypothesis 1 The negative stock price Layoffs and shareholder wealth

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