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Who is in charge of layoffs? The impact of CEO education on the likelihood of layoffs

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en
dc.contributor.author Haakana, Anna-Lotta
dc.date.accessioned 2016-06-14T06:01:07Z
dc.date.available 2016-06-14T06:01:07Z
dc.date.issued 2016
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/20731
dc.description.abstract OBJECTIVES OF THE STUDY Layoffs have been widely discussed in the existing literature of economics and several firm- and industry-level characteristics have been found to affect the likelihood of firms to engage in them. Despite the recent wave of finance studies analyzing the impact of CEO characteristics on firm decision-making, there seem to be less literature related to the CEOs making the decisions to lay off employees. The objective of this paper is thus to find out whether managerial characteristics, and especially the field and level of CEO education, have an impact on the likelihood of the firm to engage in layoffs, when it experiences a significant drop in performance. DATA AND METHODOLOGY The sample consists of 284 firms that experience a significant drop in their performance during a distress year between 2007 and 2013. The sample also includes 121 layoff announcements made by those firms. The data related to CEO education as well as to layoff announcements is hand-collected. As the main method of this paper I use a logistic regression model, where dependent variable takes value 1 if the firm announces at least one layoff during the observation time. In analysis, I also control for year and industry fixed effects. In addition, I analyze whether the behavior of CEOs is different at the beginning of tenure than later on. FINDINGS The results indicate that CEO education has some impact on layoffs. CEOs having MBA are more likely to engage in layoffs whereas those with technical education are less likely. However, these attributes do not explain layoffs in my sample. Instead, firms having CEOs with economic education in general at undergraduate or graduate level, are found to be significantly more likely to engage in layoffs than those firms where CEOs do not have economic education. According to the expectations, the results also show that odds of layoffs are higher when the CEO has graduate degree compared to those without. The likelihood of layoffs seems to be at highest when the CEO has only Master's level degree: they are 42.6% more likely to lay off employees than firms with CEOs having either Ph.D. or undergraduate level of education. Further, results indicate that poor performance explains more of layoffs made by CEOs with shorter tenure whereas leverage explains more of those made by CEOs with longer tenure. Overall, large firm size seems to be the most consistent determinant explaining the likelihood of layoffs. en
dc.format.extent 78
dc.language.iso en en
dc.title Who is in charge of layoffs? The impact of CEO education on the likelihood of layoffs en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Rahoituksen laitos fi
dc.contributor.department Department of Finance en
dc.subject.keyword layoffs
dc.subject.keyword CEO
dc.subject.keyword CEO education
dc.identifier.urn URN:NBN:fi:aalto-201609083441
dc.type.dcmitype text en
dc.programme.major Rahoitus fi
dc.programme.major Finance en
dc.type.ontasot Pro gradu tutkielma fi
dc.type.ontasot Master's thesis en
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon yritykset
dc.subject.helecon companies
dc.subject.helecon irtisanominen
dc.subject.helecon giving notice
dc.subject.helecon vastuu
dc.subject.helecon responsibility
dc.subject.helecon henkilöstöhallinto
dc.subject.helecon personnel management
dc.subject.helecon johtaminen
dc.subject.helecon management
dc.subject.helecon johtajat
dc.subject.helecon managers
dc.subject.helecon koulutus
dc.subject.helecon training
dc.ethesisid 14406
dc.date.dateaccepted 2016-05-18
dc.location P1 I
local.aalto.openaccess no
local.aalto.idthes 14406


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