Rival growth prospects and equity prices : evidence from mass layoff announcements

Adam Bordeman, Bharadwaj Kannan, and Roberto Pinheiro

We investigate the impact of mass layoff announcements on the equity value of industry rivals. When a layoff announcement conveys good (bad) news for the announcer, rivals on average witness a 0.44 percent increase (0.60 percent decrease) in cumulative abnormal stock returns. This effect is concentrated on rivals with high growth opportunities. Consistent with this finding, we also show that our results are strongest in technology industries, where growth opportunities matter the most. Our results suggest that investors perceive layoff announcements as news about industry prospects rather than just the announcer.

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Alternative title:	Competitors' stock price reaction to mass layoff announcements
Year of publication:	2018
Authors:	Bordeman, Adam ; Kannan, Bharadwaj ; Pinheiro, Roberto
Publisher:	[Cleveland, OH] : Federal Reserve Bank of Cleveland
Subject:	Mass Layoffs \| Rivals \| Firm characteristics \| Börsenkurs \| Share price \| Ankündigungseffekt \| Announcement effect \| Kündigung \| Dismissal

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Extent:	1 Online-Ressource (circa 66 Seiten) Illustrationen
Series:	Federal Reserve Bank of Cleveland working paper series. - Cleveland, Ohio : [Verlag nicht ermittelbar], ISSN 2573-7953, ZDB-ID 2185007-0. - Vol. 16, 10R (September 2018)
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Notes:	First version April 2016 under the title "Competitors' Stock Price Reaction to Mass Layoff Announcements." Previous versions of the paper were also circulated under the title "Miners' Canary or Noah's Dove: The Industry Prospects of Layoff Announcements."
Other identifiers:	10.26509/frbc-wp-201610r [DOI]
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011900749