Picture of wind turbine against blue sky

Open Access research with a real impact...

The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs.

The Energy Systems Research Unit (ESRU) within Strathclyde's Department of Mechanical and Aerospace Engineering is producing Open Access research that can help society deploy and optimise renewable energy systems, such as wind turbine technology.

Explore wind turbine research in Strathprints

Explore all of Strathclyde's Open Access research content

Employee layoffs, shareholder wealth and firm performance: evidence from the UK

McColgan, P. and Hillier, C. and Marshall, A.P. and Wereman, S. (2007) Employee layoffs, shareholder wealth and firm performance: evidence from the UK. Journal of Business Finance and Accounting, 34 (3-4). pp. 467-494. ISSN 0306-686X

Full text not available in this repository. (Request a copy from the Strathclyde author)

Abstract

We examine the financial performance of UK listed companies surrounding the announcement of permanent employee layoffs. We find that poor operating and stock price performance, increased gearing, and threats from external markets for corporate control precede employee layoffs. Layoff announcements elicit a significantly negative stock price reaction, which is driven by announcements that are reactive to poor financial conditions. We also find that layoffs result in significant increases in employee productivity and corporate focus. We conclude that layoffs represent an efficient response to poor financial conditions, but that their occurrence is strongly dependent on pressure from external control markets.