Purpose: 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.Design/methodology/approach: 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.Findings: 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.Originality/value: 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.

This paper explores differences between equity crowdfunding and peer-to-peer (p2p) lending determinants of cross-border activity, from a user’s perspective. We use a unique database of survey respondents, registered in equity crowdfunding and p2p lending platforms across Europe. We find clear differentiations between equity crowdfunding and p2p lending. Equity crowdfunders are driven mainly by excitement while p2p lenders are driven by higher returns. As regards cross-border activity, equity crowdfunders are almost 7 times more likely to invest in foreign projects. Both equity crowdfunders and p2p lenders try to achieve diversification via cross-border activity, following however different strategies. We conclude that these differences should be taken under consideration, while implementing the pan-European regulatory framework for crowdfunding with financial returns (ECSP).

This paper examines the market reaction to the European bank stress test announcement and results release events. Using event study methodology (calculating abnormal returns on a three-day period around the event dates), we find that the market reacts differently between the announcement event and the results release event. We also show that the market seems to positively overreact one day before each event, and that this positive reaction is either fully or partially reversed one day after the event. We thus conclude that researchers should consider both events when exploring the market reaction to stress-testing exercises.

Purpose: The purpose of this paper is to add to the existing literature about whether and how a continuous belief-update mechanism affects investors' risk perceptions in crowdfunding. The authors build on existing literature on the impact of a continuous belief-update mechanism on return expectations and risk perceptions, as a result of the funders' personal return and risk experiences, and apply this approach to the crowdfunding area. The authors thus add two specific insights about these dynamic new markets. First, the authors measure the perceived risk along multiple dimensions. Second, the authors consider how perceived risk differs across experienced investors and inexperienced investors, using two levels of analysis.Design/methodology/approach: The paper uses a unique data set of survey respondents on crowdfunding with financial returns. The data set covers Germany, Poland and Spain. Survey data were derived by market research conducted in two stages. The first stage consists of two questions asked within an omnibus survey conducted by computer-assisted telephone interviews. In the second stage, multiple questions (including QA.1 and QA.2 and demographics) were included in an online survey or computer-assisted web interview for the same three countries.Findings: The authors find that experienced investors perceive risks at lower levels than users that are aware of crowdfunding, but have not yet had the experience of an actual investment. The authors also find that investors, who invest larger proportions of their savings in crowdfunding with financial returns, perceive risks even lower than “lighter” investors, for the majority of risks the authors investigate.Research limitations/implications: The study is limited in three European countries and explores crowdfunding with financial returns only.Practical implications: The study suggests that investors' participation and activity in crowdfunding with financial returns can be increased, either via providing incentives for “first investment” or via the creation of investment simulators.Originality/value: This study contributes to the following three areas. First, the authors shed new evidence on the dynamics of crowdfunding with financial returns and explore how decisions are being made in a context of reverse information asymmetries. Second, the authors explore how the “crowd” reshapes risk perceptions via a belief-update mechanism; this is of high importance under the absence of traditional financial intermediaries, which increases the severity of information asymmetries. Third, the authors enrich literature associated with how laypeople take investment decisions, showing how prior experience affects investment decision making.

We construct a novel hand-collected large dataset of 205 U.S. hedge funds and 1025 activist events over the period 2005–2013, which records both the Schedule 13D filing date and the voice date, and explore the role of voice in value creation. We employ alternative inferential statistical approaches, including parametric, non-parametric, and heteroscedasticity-robust tests. We reveal that the voice date is important in creating short-term firm value and provide strong evidence that voice is associated with positive abnormal returns. These findings suggest that voice leads to information revelation, with implications for U.S. stock market arbitrage.