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- W4200475567 abstract "Purpose This paper investigates the effects of layoff announcement by customers on the valuation and operating performance of their supply chain partners. Design/methodology/approach The authors collect corporate layoff announcements from 8-K filings submitted by US publicly-traded firms from 2004 to 2017. Using event study methodology, they examine the information externality of corporate layoffs on announcing firms' suppliers. Findings Results show that suppliers, on average, experience a negative stock price reaction around their major customers' layoff announcements. The negative price effect is exacerbated when industry rivals of layoff-announcing customers also suffer from negative intra-industry contagion effects. Additionally, supply chain spillover effects are asymmetric, with only “bad news” layoff announcements causing significant value implications for suppliers, but not “good news” announcements. Supplier firms also reduce their investments in and sales dependence on layoff-announcing customers in subsequent years. Practical implications This study shows that layoff decisions, often aimed at improving firms' efficiency and effectiveness, create uncertainty for the suppliers' operation and cause negative value implications on firms' upstream partners. Findings should be useful to corporate decision-makers in making layoff decisions. Originality/value This paper is one of the first to address the value implications of corporate layoffs on announcing firms' suppliers. It provides a more comprehensive picture of the economy-wide impact of achieving efficiency through employee layoffs." @default.
- W4200475567 created "2021-12-31" @default.
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- W4200475567 date "2021-12-14" @default.
- W4200475567 modified "2023-09-27" @default.
- W4200475567 title "Economic links and the wealth effects of layoff announcements along the supply chain" @default.
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- W4200475567 doi "https://doi.org/10.1108/ijpdlm-01-2021-0010" @default.
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