IDEAS home Printed from https://ideas.repec.org/a/bla/perwir/v10y2009i1p1-20.html
   My bibliography  Save this article

Kursgewinne durch Entlassungspläne? Erste Ergebnisse aus Deutschland

Author

Listed:
  • Werner Neus
  • Andreas Walter

Abstract

Employing traditional event study methodology we examine the market reaction to layoff announcements of firms listed on the German stock market. We contribute to the international literature in this field with two major results. First, unlike anecdotal and similar to international evidence we report a negative and significant abnormal rate of return of −0.37 percent on the announcement day. Further, we find that the reason for the layoff announcement plays a decisive role in the revaluation process. On the one hand, stocks of firms that announce layoffs as a reaction to declining market conditions are associated with a more intense negative market response. On the other hand, even stocks of firms that intend to enhance their profitability by means of layoffs do not show a significant positive reaction.

Suggested Citation

  • Werner Neus & Andreas Walter, 2009. "Kursgewinne durch Entlassungspläne? Erste Ergebnisse aus Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(1), pages 1-20, February.
    • Handle: RePEc:bla:perwir:v:10:y:2009:i:1:p:1-20
    DOI: 10.1111/j.1468-2516.2008.00291.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-2516.2008.00291.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1468-2516.2008.00291.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Phillip McKnight & Anthony Lowrie & Chris Coles, 2002. "Investor Reactions, Social Implications and Layoff Announcements in the UK: A Comparison between Periods," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(1), pages 83-100, March.
    2. Peggy M. Lee, 1997. "A comparative analysis of layoff announcements and stock price reactions in the United States and Japan," Strategic Management Journal, Wiley Blackwell, vol. 18(11), pages 879-894, December.
    3. David Hillier & Andrew Marshall & Patrick McColgan & Samwel Werema, 2007. "Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3‐4), pages 467-494, April.
    4. Armitage, Seth, 1995. "Event Study Methods and Evidence on Their Performance," Journal of Economic Surveys, Wiley Blackwell, vol. 9(1), pages 25-52, March.
    5. Binder, John J, 1998. "The Event Study Methodology since 1969," Review of Quantitative Finance and Accounting, Springer, vol. 11(2), pages 111-137, September.
    6. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
    7. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    8. Fayez A. Elayan & George S. Swales & Brian A. Maris & James R. Scott, 1998. "Market Reactions, Characteristics, and the Effectiveness of Corporate Layoffs," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(3‐4), pages 329-351, April.
    9. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    10. Fayez A. Elayan & George S. Swales & Brian A. Maris & James R. Scott, 1998. "Market Reactions, Characteristics, and the Effectiveness of Corporate Layoffs," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(3&4), pages 329-351.
    11. Hallock, Kevin F, 1998. "Layoffs, Top Executive Pay, and Firm Performance," American Economic Review, American Economic Association, vol. 88(4), pages 711-723, September.
    12. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    13. David Hillier & Andrew Marshall & Patrick McColgan & Samwel Werema, 2007. "Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3-4), pages 467-494.
    14. Syed Zulfiqar Ali Shah, 2007. ""Discussion of" Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3-4), pages 495-504.
    15. Oded Palmon & Huey-Lian Sun & Alex P. Tang, 1997. "Layoff Announcements: Stock Market Impact and Financial Performance," Financial Management, Financial Management Association, vol. 26(3), Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Berninger, Marc & Gärtner, Henrik & Schiereck, Dirk, 2018. "Kapitalmarktreaktionen auf die Ankündigung von Personalabbauplänen – ein Überblick über drei Jahrzehnte empirische Evidenz," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 72(4), pages 289-325.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berninger, Marc & Gärtner, Henrik & Schiereck, Dirk, 2018. "Kapitalmarktreaktionen auf die Ankündigung von Personalabbauplänen – ein Überblick über drei Jahrzehnte empirische Evidenz," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 72(4), pages 289-325.
    2. Santiago Velásquez & Juho Kanniainen & Saku Mäkinen & Jaakko Valli, 2018. "Layoff announcements and intra-day market reactions," Review of Managerial Science, Springer, vol. 12(1), pages 203-228, January.
    3. Schulz, Ann-Christine & Johann, Sarah, 2018. "Downsizing and the fragility of corporate reputation: An analysis of the impact of contextual factors," Scandinavian Journal of Management, Elsevier, vol. 34(1), pages 40-50.
    4. Omer Ahmed Sayed & Hussein Eledum, 2023. "The short‐run response of Saudi Arabia stock market to the outbreak of COVID‐19 pandemic: An event‐study methodology," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2367-2381, July.
    5. David Hillier & Andrew Marshall & Patrick McColgan & Samwel Werema, 2007. "Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3‐4), pages 467-494, April.
    6. Jason K. Deane & David M. Goldberg & Terry R. Rakes & Loren P. Rees, 2019. "The effect of information security certification announcements on the market value of the firm," Information Technology and Management, Springer, vol. 20(3), pages 107-121, September.
    7. Wijayana, Singgih & Gray, Sidney J., 2018. "Capital market consequences of cultural influences on earnings: The case of cross-listed firms in the U.S. stock market," International Review of Financial Analysis, Elsevier, vol. 57(C), pages 134-147.
    8. Jérôme Hubler & Pierre-Xavier Meschi & Géraldine Schmidt, 2004. "Annonces de suppressions d’emplois et valeur boursière de l’entreprise," Revue Finance Contrôle Stratégie, revues.org, vol. 7(4), pages 107-142, December.
    9. Tihana Škrinjarić, 2021. "Profiting on the Stock Market in Pandemic Times: Study of COVID-19 Effects on CESEE Stock Markets," Mathematics, MDPI, vol. 9(17), pages 1-20, August.
    10. Furdui Călin & Șfabu Dorina Teodora, 2023. "The European Banks Under the Shock of the Russian Invasion of 2022: An Event Study Approach," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 68(1), pages 62-77, April.
    11. David M. Goldberg & Jason K. Deane & Terry R. Rakes & Loren Paul Rees, 2022. "3D Printing Technology and the Market Value of the Firm," Information Systems Frontiers, Springer, vol. 24(4), pages 1379-1392, August.
    12. Capelle-Blancard, Gunther & Couderc, Nicolas, 2008. "What drives the market value of firms in the defense industry," Review of Financial Economics, Elsevier, vol. 17(1), pages 14-32.
    13. Yan Zeng & Josie McLaren, 2015. "The impact of large public sales of Government assets: empirical evidence from the Chinese stock markets on a gradual and offer-to-get approach," Review of Quantitative Finance and Accounting, Springer, vol. 45(1), pages 137-173, July.
    14. Bogdan Capraru & Iulian Ihnatov & Nicu Sprincean, 2016. "The Effect Of Major Events On Bank Share Price In Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 747-757, July.
    15. Khoury Rim El, 2019. "The Cac 40 Index’S Reaction To Terrorist Attacks: The Case Of Charlie Hebdo," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 14(2), pages 55-72, August.
    16. Pushpanjali Kaul & Sangeeta Arora, 2022. "Reinventing a brand’s identity: effect of name and logo announcements on the stock price of Indian banks," Journal of Brand Management, Palgrave Macmillan, vol. 29(3), pages 258-270, May.
    17. Ralf Schremper, 2003. "Kapitalmarktrelevanz deutscher Aktienrückkaufprogramme," Schmalenbach Journal of Business Research, Springer, vol. 55(6), pages 578-605, September.
    18. Fan, Di & Liang, Tianheng & Yeung, Andy C.L. & Zhang, Haomin, 2020. "The impact of capacity-reduction initiatives on the stock market value of Chinese manufacturing firms," International Journal of Production Economics, Elsevier, vol. 223(C).
    19. Devaney, Michael, 2012. "Financial crisis, REIT short-sell restrictions and event induced volatility," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(2), pages 219-226.
    20. Bogdan Capraru & Iulian Ihnatov & Nicu Sprincean, 2016. "Changes of Executives and Ownership in a Romanian Small Bank: an Event Study Approach," EuroEconomica, Danubius University of Galati, issue 1(35), pages 36-46, may.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:perwir:v:10:y:2009:i:1:p:1-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.