Wall Street is no longer rewarding job-cut announcements, Goldman analysis finds

In the past, company share prices typically responded very positively to announcements regarding job layoffs if they were motivated by productivity gains or cost savings. Now though, corporates have underperformed the overall market by 2% after making such disclosures.

The trend of late, Goldman finds, has been for companies to attribute job cuts to generally benign initiatives to restructure, driven by automation and technological improvements. But while these shares have lagged the market by 2%, those companies cutting workers and explicitly telling investors that a restructuring is the reason have suffered even more pronounced falls. These average excess returns are minus 7%.