Industrial Concentration, Innovation, and Corporate Layoffs Announcements

• Main Authors: Chih-Chia Chen, 陳志嘉
• Other Authors: I-Ju Chen
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/08968091974568108430

碩士 === 元智大學 === 財務金融學系 === 98 === This study investigates the effects of industrial concentration and innovation on corporate layoff decisions and event announcing returns. This study also supposes that firms with high industrial concentration are less likely to adopt layoffs since they have market competitive advantages but will have strong negative returns when announcing layoffs (Hypothesis 1). Moreover, investments in human resources and innovation often have trade-off relationship. This study expects innovation will affect corporate layoffs decision-making (Hypothesis 2). We search layoff announcement events of U.S. public companies from 1995 to 2007 to examine related hypotheses based on event study method. We find out that firms announcing layoffs in highly concentrated industries associated with lower layoff rate, but the relation between industrial concentration and layoffs, or the response to stock returns is not significant during economic downturn. Besides, firms with high innovation announcing layoffs associated with higher layoff rate and insignificantly negative response to stock returns. Our results support barrier-to-entry hypothesis and propose that the competitive advantage in industrial concentration does affect corporate layoff decisions. Furthermore, investment in innovation also has powerful influences in corporate layoff decisions.