The market reaction to layoff announcements: a union‐nonunion comparison

Steven E. Abraham

International Journal of Manpower, 2006, vol. 27, issue 5, 452-466

Abstract: Purpose - The purpose of this paper is to compare the market reaction to layoff announcements of union and nonunion employees. Design/methodology/approach - Event study methodology was utilized to assess the effects of layoff announcements of union versus nonunion employees. The union status of the laid‐off employees was determined for 135 layoff announcements reported in theWall Street Journalin 1993 and 1994 and shareholder returns between the two groups was compared. Findings - Over each event period tested, the market reaction was more negative when nonunion employees were downsized than when the announcement concerned unionized employees. Over the two days surrounding the announcement, the market reaction to the layoff announcement of unionized employees was actually positive, while the reaction was negative when nonunion employees were the subject of the announcement. Research limitations/implications - The sample included layoff announcements from 1993 and 1994 only. The market reaction to announcements in different years might be different. Originality/value - While many papers have examined the market reaction to layoff announcements, this is the first paper that compares the reaction to union versus nonunion employees.

Keywords: Trade unions; Downsizing; Employees (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:01437720610683958

DOI: 10.1108/01437720610683958

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