Mardi | 2012-07-03
B103

Delia CORNEA-TATU – Gunther CAPELLE-BLANCARD

The stock market reaction to layoff announcements depends on investors’ perception regarding the information contained in these announcements. In this paper, we examine this reaction using a new sample of restructuring announcements occurred in different European countries, over the period 2002-2010. The results reveal an overall negative, but not significant, market reaction of –0.177% for a three days event window. However, extending the analysis to specific layoff characteristics and to other variables characterizing sectorial and macroeconomic environment of restructuring countries we find that the stock market reaction is significantly correlated with the reasons stated into announcement, the frequency of layoffs occurrence and macroeconomic context. Moreover, some specific labor market indicators, like employment protection legislation, labor cost and unemployment reveal a significant impact on stock price reaction.