We report preliminary results of an analysis of the reaction of stock prices to
announcements of reductions in force (RIFs) using a large sample of such announcements
during the 1970-1997 period collected from the Wall Street Journal index. We find some
evidence that the stock market reaction to the announcement of RIFs has become less
negative over this period. While a complete understanding of the underlying causes of
this finding awaits further research, one possible interpretation is that, over the last three
decades, RIF s designed to improve efiiciency have become more common relative to RIFs
designed to cope with reductions in product demand.