Capital Market Behavior and Operational Announcements of Layoffs, Operation Closings, and Pay Cuts

17 Pages Posted: 23 May 2006

See all articles by Ji-Chai Lin

Ji-Chai Lin

Hong Kong PolyU

Michael S. Rozeff

SUNY at Buffalo - Department of Financial & Managerial Economics

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.

Keywords: operation closings, cost-cutting, layoffs, pay cuts, stock returns

JEL Classification: G10, G14, G19, G34

Suggested Citation

Lin, Ji-Chai and Rozeff, Michael S., Capital Market Behavior and Operational Announcements of Layoffs, Operation Closings, and Pay Cuts. Review of Quantitative Finance and Accounting, Vol. 3, 1993. Available at SSRN: https://ssrn.com/abstract=903515

Ji-Chai Lin

Hong Kong PolyU ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon
China

Michael S. Rozeff (Contact Author)

SUNY at Buffalo - Department of Financial & Managerial Economics ( email )

Buffalo, NY 14260
United States

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