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Human Capital Reorganizations and Market Performance: U.S. Firms

Author

Listed:
  • Anne Anderson

    ()

  • E. James Cowan

    ()

  • Karen C. Denning

    ()

Abstract

This empirical examination of human capital reorganizations uses Standard and Poor¡¯s large, mid and small cap firms and demonstrates that the typical market response is suggestive of what casual empiricism would suggest: firms undertake work force reductions in periods of poor performance. Though the average firm experiences negative price impacts, nearly half (45%) do not. Firm size and technological intensity matter in impacting the negative abnormal results. Bankruptcy potential and financial distress do not appear to be significant indicators. Offshoring and financing changes intensify the market effect whereas asset changes have a positive impact. Changes in business focus and changes in technology seem to have no impact on the market response to layoffs decisions.

Suggested Citation

  • Anne Anderson & E. James Cowan & Karen C. Denning, 2015. "Human Capital Reorganizations and Market Performance: U.S. Firms," Business and Economic Research, Macrothink Institute, vol. 5(2), pages 97-121, December.
  • Handle: RePEc:mth:ber888:v:5:y:2015:i:2:p:97-121
    as

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    File URL: http://www.macrothink.org/journal/index.php/ber/article/view/7878/6629
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    File URL: http://www.macrothink.org/journal/index.php/ber/article/view/7878
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    References listed on IDEAS

    as
    1. Chow, K. Victor & Denning, Karen C., 1993. "A simple multiple variance ratio test," Journal of Econometrics, Elsevier, vol. 58(3), pages 385-401, August.
    2. Jeffrey T. Brookman & Saeyoung Chang & Craig G. Rennie, 2007. "CEO Cash and Stock-Based Compensation Changes, Layoff Decisions, and Shareholder Value," The Financial Review, Eastern Finance Association, vol. 42(1), pages 99-119, February.
    3. 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.
    4. M. Ameziane Lasfer & Puliyur S. Sundarsanam & Richard J. Taffler, 1996. "Financial Distress, Asset Sales and Lender Monitoring," Financial Management, Financial Management Association, vol. 25(3), Fall.
    5. Seung Ho Park & Gerardo R. Ungson, 2001. "Interfirm Rivalry and Managerial Complexity: A Conceptual Framework of Alliance Failure," Organization Science, INFORMS, vol. 12(1), pages 37-53, February.
    6. 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)

    More about this item

    Keywords

    Restructuring; Capital budgeting; Information and efficiency;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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