The impact of the WARN Act on firm value

The impact of the WARN Act on firm value

The Worker Adjustment and Retraining Notification (WARN) Act of 1989 mandated that at least 60 days advance notice be given to employees. Critics argued that its passage would decrease managerial flexibility in closing plants, subsequently reducing firm values. This study addresses this issue by exa...

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Veröffentlicht in:The Quarterly review of economics and finance 1997, Vol.37 (4), p.905-921
Hauptverfasser: Alexander, John C., Spivey, Michael F.
Format: Artikel
Sprache:eng
Schlagworte:
Business enterprises
Effects
Federal legislation
Laws, regulations and rules
Layoffs
Legislation
Organizational change
Plant shutdowns
Rates of return
Return on investment
Securities markets
Shutdowns
Statistical analysis
Stock-exchange
Studies
Valuation
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Beschreibung
Zusammenfassung:The Worker Adjustment and Retraining Notification (WARN) Act of 1989 mandated that at least 60 days advance notice be given to employees. Critics argued that its passage would decrease managerial flexibility in closing plants, subsequently reducing firm values. This study addresses this issue by examining the stock market's reaction to announcements leading to the eventual enactment of the WARN legislation. We find evidence indicating negative effects of the legislation on stock returns of small firms.
ISSN:1062-9769
1878-4259
DOI:10.1016/S1062-9769(97)90010-7