Layoff announcements and intra-day market reactions

Santiago Velasquez , Juho Kanniainen, Saku Mäkinen, Jaakko Valli

    Tutkimustuotos: ArtikkeliScientificvertaisarvioitu

    2 Sitaatiot (Scopus)
    69 Lataukset (Pure)

    Abstrakti

    This paper examines investor intra-day reactions related to two types of layoff announcements, the first one at the start of layoff negotiations and the other at the final layoff decisions. We provide statistically significant evidence that, on average, investors have strongly negative reaction to layoff negotiations within the first 10 minutes. However, we also provide strong evidence that the first negative reaction is reversed by an upward post-drift in aggregated cumulative abnormal returns in the following hours, perhaps because markets need hours to process such unpredictable and complex information and its consequences – even if their first reaction was strong and immediate. Moreover, on the aggregated level, final layoff announcements do not generally convey information that is exceptionally useful to investors, except when reactions to associated initial announcements have not been statistically significant. Importantly, our analysis demonstrates the importance of the use of intra-day data: The reactions, which can be strong but short-lived, are identifiable with intra-day data only. Finally, we find that intra-day reactions cannot be explained by various company background characteristics, such as the number of employees, sales, profitability, and assets/liabilities ratio.
    AlkuperäiskieliEnglanti
    Sivut203–228
    Sivumäärä26
    JulkaisuReview of Managerial Science
    Vuosikerta12
    Numero1
    Varhainen verkossa julkaisun päivämäärä2016
    DOI - pysyväislinkit
    TilaJulkaistu - tammik. 2018
    OKM-julkaisutyyppiA1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä

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