Abstract
AbstractEmploying traditional event study methodology we examine the market reaction to layoff announcements of firms listed on the German stock market. We contribute to the international literature in this field with two major results. First, unlike anecdotal and similar to international evidence we report a negative and significant abnormal rate of return of −0.37 percent on the announcement day. Further, we find that the reason for the layoff announcement plays a decisive role in the revaluation process. On the one hand, stocks of firms that announce layoffs as a reaction to declining market conditions are associated with a more intense negative market response. On the other hand, even stocks of firms that intend to enhance their profitability by means of layoffs do not show a significant positive reaction.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
