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  6. The Effects of Human Resource Management Decisions on Shareholder Value

The Effects of Human Resource Management Decisions on Shareholder Value

File(s)
89_20_The_Effects_of_Human_Resource.pdf (2.19 MB)
Permanent Link(s)
https://hdl.handle.net/1813/77297
Collections
CAHRS Working Paper Series
Faculty Publications - Human Resource Studies
Faculty Publications - Labor Economics
ILR Working Papers
Author
Abowd, John M.
Milkovich, George T.
Hannon, John M.
Abstract

We examine the effects of selected human resource management decisions on the abnormal change in total shareholder return. Announcements of human resource decisions are classified into five types--general HR system announcements, compensation and benefits, staffing, shutdowns and relocations, and miscellaneous. Using an event study methodology we investigate whether any of these HR decisions had a discernible effect on either the level or variation of abnormal total shareholder return. We find no consistent pattern of increased or decreased valuation in response to the different types of HR announcements, even after controlling for the likely effect of such announcements on total compensation costs. We do find substantially increased variation in abnormal total shareholder return around the announcement date, which indicates that HR decisions do provide information to the stock market. The events associated with increased variation in total shareholder value are permanent staff reductions and shutdown/relocations. The absence of consistent valuation effects combined with the evidence of increased variation in shareholder value may be attributed to uncontrolled firm-specific factors, the categorization of the HR events or, simply, to the unique interpretations the market placed upon these events.

Date Issued
1989-11-01
Keywords
CAHRS
•
ILR
•
center
•
human resource
•
job
•
worker
•
advanced
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labor market
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satisfaction
•
employee
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work
•
manage
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shareholder
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HR
•
management
Type
preprint

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