Layoff announcements and stock price reactions in Finland: Value versus growth

The purpose of this study is to research permanent layoff announcements’ impact on stock prices and to compare the stock price reactions between growth and value stocks. The data consist of 160 announcements for the disclosures of permanent layoffs with Finnish large and mid-size listed companies from the Nasdaq OMX Helsinki in the time period of January 2004 until June 2010. Event study methodology is used to examine the abnormal performance for permanent layoff announcements and the analysis of stock price reactions to permanent layoffs is divided into three different parts according to the cited reason for the layoff, the difference between growth and value in two different business cycles and whether the layoff and firm size have impact on the abnormal returns. The stock price reaction to permanent layoffs is positive, but not statistically significant, for both declined demand and improved efficiency subsamples, when the abnormal performance is observed regarding the cited reason. Value stocks signal a more negative reaction in non-recessionary period of 2004-2007 and less positive reaction in the recessionary period of 2008-2010 than growth stocks.fi=Opinnäytetyö kokotekstinä PDF-muodossa.|en=Thesis fulltext in PDF format.|sv=Lärdomsprov tillgängligt som fulltext i PDF-format