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Layoffs and stock market performance during the COVID-19 pandemic: evidence from the US

Christos Floros (Department of Accounting and Finance, Hellenic Mediterranean University, Heraklion, Greece)
Maria Psillaki (Department of Economics, University of Piraeus, Piraeus, Greece) (Department of Accounting and Finance, Neapolis University Paphos, Paphos, Cyprus)
Efstathios Karpouzis (Department of Accounting and Finance, Neapolis University Paphos, Paphos, Cyprus)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 29 December 2021

Issue publication date: 24 February 2023




The authors examine the short-term stock market reaction surrounding US layoffs during the coronavirus disease 2019 (COVID-19) period. The authors’ specific interest is on any changes that may be observed in US stock markets during the COVID-19 outbreak. This information will help us assess the extent to which policymakers adopted at time revenue and expenditures measures to minimize its negative impact.


The authors study the linkage between layoffs announced by firms and stock markets in US for the COVID-19 period between March 2020 and October 2020. This period shows important economic figures; a huge number of job cuts announced by blue-chip companies listed in the New York Stock Exchange (NYSE) due to widespread economic shutdowns. The authors examine whether and to what extent stock markets in US have reacted to layoff announcements during the COVID-19 pandemic using an event-study methodology.


The study’s results show that US layoffs during the pandemic did not cause any abnormalities on the stock returns, either positive or negative. Based on the mean-adjusted volume, the authors find that layoffs increase the stocks' trading volume, especially on the event date and the day following the event. US stocks become more volatile on the days following the event. Interestingly, on the event date, the authors find that stocks get the highest abnormal volatility; however, the result is statistically insignificant.

Practical implications

The authors suggest that layoffs announcements follow the business cycle quite closely in most industries. The study’s results have implications for investors, regulators and policymakers as they permit to examine the effectiveness of the measures adopted.

Social implications

The study’s results show that policymakers reduced uncertainty implementing intensive measures quickly and should follow similar policy in the future pandemic and/or unexpected events.


This paper contributes to the literature in two directions: First, to the best of the authors’ knowledge this is the first study that provides empirical evidence and assesses the extent to which a major global shock such as the COVID-19 pandemic may have altered the reaction of US stock markets to layoff announcements. Second, this is the first study on this topic that examines volume and volatility abnormalities, while the authors check the robustness of the findings with different methods to calculate abnormal returns.



Floros, C., Psillaki, M. and Karpouzis, E. (2023), "Layoffs and stock market performance during the COVID-19 pandemic: evidence from the US", Journal of Economic Studies, Vol. 50 No. 2, pp. 96-108.



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