The Information Content of Plant Closing Announcements: Evidence from Financial Profiles and the Stock Price Reaction

Gombola, Michael; Tsetsekos, George P.

doi:10.2307/3665662

Cited by 52 publications

(48 citation statements)

References 5 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Statman and Sepe (1989) report a positive market reaction to abandonments, while both Gombola and Tsetsekos (1992) and Blackwell, Marr and Spivey (1990) report negative market reactions to permanent plant closings. Becker (1987) finds that shareholders gain when firms obtain union concessions in contracts.…”

Section: Introductionmentioning

confidence: 99%

Capital market behavior and operational announcements of layoffs, operation closings, and pay cuts

Lin

Rozeff

1993

Rev Quant Finan Acc

View full text Add to dashboard Cite

Abstract. This article examines the relation between stock returns and a set of operating decisions: layoffs, operation closings, and pay cuts. We find evidence that cost-cutting measures occur after significant stock price declines. Announcements of layoffs and temporary operation closings are associated with negative returns, while permanent operation closings do not have significant announcement effects.

show abstract

Section: Introductionmentioning

confidence: 99%

Capital market behavior and operational announcements of layoffs, operation closings, and pay cuts

Lin

Rozeff

1993

Rev Quant Finan Acc

View full text Add to dashboard Cite

show abstract

“…This has been confirmed by other researchers: the marketplace does not reward, in the long run, most downsizing efforts. This is particularly true if the intent of these workforce reductions is merely in response to a shortterm budget deficit, or is seen as a move to get a boost in operational efficiencies by costshaving (Gombola and Tsetsekos, 1992;Lee, 1997;Ursel and Armstrong-Stassen, 1995). Indeed, large-scale workforce reductions rarely lead to improved financial performance as validated by a sustainable rise in share price.…”

Section: Organizational Consequences Of Downsizingmentioning

confidence: 91%

Reducing the workforce: examining its consequences in health care organizations

Wagar

Rondeau²

2000

Leadership in Health Services

View full text Add to dashboard Cite

In recent years, health care in Canada as elsewhere has witnessed unprecedented restructuring and reorganization. Concurrent with the massive restructuring of health care systems, many health care organizations have dramatically downsized their workforces by shedding jobs and people. It is generally assumed that forced workforce reductions can have significant deleterious consequences on organizations. This study examines the impact of workforce reduction on perceptions of organizational performance in a large sample of Canadian health care organizations.

show abstract

“…Gombola and Tsetsekos (1992) posit that closure nevertheless elicits a negative stock price reaction by revealing the announcing firm's firm-wide performance problems, which were hitherto unknown to investors. Consistent with this view, they found that the profitability of firms announcing a closure deteriorates.…”

Section: Announcement Returnsmentioning

confidence: 98%

“…The event studies of closures are scarcer than those of selloffs. However, available evidence indicates that investors normally discount firms announcing closures (Brickley and Van Drunen, 1990;Blackwell et al, 1990;Gombola and Tsetsekos, 1992). To perform an event study, we set the date on which Nikkei first reported the focal event as the announcement date (day 0).…”

Section: Announcement Returnsmentioning

confidence: 99%