Layoff Announcements: Stock Market Impact and Financial Performance

Palmon, Oded; Sun, Huey Lian; Tang, Alex P.

doi:10.2307/3666213

Cited by 102 publications

(107 citation statements)

References 6 publications

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“…For their part, managers have an opportunistic interest in reducing societal costs in order to maximize the share price and, consequently, their remuneration that is indexed to stock market performance in the form of shares or stock options. An interesting parallel can be drawn with restructuring plans and staff redundancies where the positive effects on market price are ambivalent (Palmon, Sun, & Tang, 1997). Finally, another explanation may shed light on the observed negative relationship between social responsibility and financial performance.…”

Section: ~ 39 ~mentioning

confidence: 99%

Relationships between Corporate Social Responsibility and Financial Performance: What is the Causality?

Hirigoyen¹,

Poulain-Rehm

2015

JBM

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This study examines the causal relationships between the various dimensions of corporate social responsibility (human resources, human rights in the workplace, societal commitment, respect for the environment, market behavior and governance) and financial performance (return on equity, return on assets, market to book ratio). It is based on a sample of 329 listed companies in three geographical areas (the United States, Europe and the Asia-Pacific region) for the years 2009 and 2010. Linear regression analysis and the Granger causality test were used to examine the causal relationships between social responsibility and financial performance. The results show not only that greater social responsibility does not result in better financial performance, but also that financial performance negatively impacts corporate social responsibility. JEL Classification: G30

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Section: ~ 39 ~mentioning

confidence: 99%

Relationships between Corporate Social Responsibility and Financial Performance: What is the Causality?

Hirigoyen¹,

Poulain-Rehm

2015

JBM

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show abstract

“…The 20 Indeed, some management scholars argue that employment downsizing often fails to generate the benefits sought by management (e.g., Cascio 2002). A number of studies find that layoffs are associated with low stock prices or accounting performance (Worrell, Davidson, and Sharma 1991;Lin and Rozeff 1993;Cascio, Young, and Morris 1997;Palmon, Sun, and Tang 1997;Hallock 1998), but it is difficult to separate the effects of a layoff from the effects of the adverse economic conditions that caused it. 21 See footnote 3 for details.…”

Section: Robustness Checksmentioning

confidence: 99%

A Female Style in Corporate Leadership? Evidence from Quotas

Matsa

Miller

2013

American Economic Journal: Applied Economics

491

382

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“…They also suggest there may be either a decrease or an increase in share value accompanying this layoff announcement. Palmon, Sun and Tang (1997) find that firms that lay off workers due to a decline in demand experience negative stock returns and those that lay off workers in response to efficiency improvements experience positive returns. Marshall, McColgan and McLeish (2012) focus on U.K. firms and find a similar result.…”

Section: Introductionmentioning

confidence: 99%

“…Our motivation for examining this bifurcation of the market response to human capital reorganizations is derived from work by Palmon, Sun and Tang (1997), Marshall, McColgan & McLeish (2012) and Anderson, Cowan and Denning (2015). Palmon, Sun and Tang (1997) explicitly suggest that investors may view the announcement accompanying a layoff decision as a signal. They also suggest there may be either a decrease or an increase in share value accompanying this layoff announcement.…”

Section: Introductionmentioning

confidence: 99%