The Antecedents and Consequences of Plant Closing Announcement

Amitabh S. Raturi, University of Cincinnati

ABSTRACT
Using plant closing announcements from over 200 firms and the accompanying financial data 2 years prior and 2 years after the plant closing announcement we make some critical conclusions about the plant closings in general. By comparing the performance of our sample firms to benchmark firms we show that it is likely that in declining markets small firms exit first. We also show that financial performance of firms after closing a plant shows significant improvements due to reductions in inventory levels, improved asset utilization and improved profitability.

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Updated 07/09/2013