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

Anne Anderson (), E. James Cowan () and Karen C. Denning ()

Business and Economic Research, 2015, vol. 5, issue 2, 97-121

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.

Keywords: Restructuring; Capital budgeting; Information and efficiency (search for similar items in EconPapers)
JEL-codes: G14 G31 G32 G34 (search for similar items in EconPapers)
Date: 2015
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