Market reactions to layoff announcements during crises: Examining impacts and conditioners

Rahul Kumar, Dharen Pandey and John W. Goodell

Finance Research Letters, 2023, vol. 58, issue PB

Abstract: There is limited research on the effect of layoff announcements on stock returns during difficult economic conditions. We use event study and cross-sectional analysis to examine the impacts of layoff announcements on stock market returns during recent crises. Findings reveal that layoff announcements significantly negatively impact firm stock returns in both the short and medium terms, with firm leverage, price-to-book ratio, liquidity, return on assets, volatility, and past returns being significant conditioners. Results highlight the reaction of markets to layoff announcements and the importance of considering firm and market characteristics in forecasting the impact of layoff announcements on stock performance.

Keywords: Layoff announcements; Stock performance; Financial crises; Event study (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pb:s154461232300795x

DOI: 10.1016/j.frl.2023.104423

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