Inter-industry differences in layoff announcement effects for financial institutions

摘要

This study expands the examination of workforce layoffs by banks to include non-bank financial institutions and explores inter-industry differences in market reactions to layoff announcements. In examining inter-industry differences, we control for variables that influence the market’s reaction to a layoff announcement, such as firm size, the size of the layoff, the reason given for the layoff, and the governance structure of the firm. We provide evidence of inter-industry differences in market reaction to layoff announcements by financial institutions, with banks experiencing more favorable stock-price reactions than other types of regulated firms. These results provide evidence that bank regulation reduces asymmetric information surrounding managerial announcements to a greater degree than the regulation of other types of financial institutions.