Does a Compressed Workweek Benefit Shareholders? An Event Study Analysis of Belgium’s Adoption of the Four-Day Workweek

On February 15th 2022, Belgium became the first country in the world to agree on the legal adoption of a four-day workweek, allowing qualifying employees to work four days per week without reducing their total number of working hours. We examine shareholders’ assessment of the economic implications of the four-day workweek legislation by conducting an event study analysis of its stock price effects. We find that Belgian listed firms have, on average, positive abnormal stock returns on the day of the four-day workweek’s announcement. A regression analysis of cross-sectional differences in stock price reactions suggests shareholders value the labor productivity-enhancing benefits of the four-day workweek. An event study on a wider sample of international firms with Belgian subsidiaries affected by the legislation confirms these results and suggests shareholders also value the four-day workweek’s potential to mitigate employee salary demands. Conversely, we obtain no evidence that shareholders believe the four-day workweek will reduce non-salary-related operating costs. Our results have meaningful implications for HR managers considering the adoption of compressed working arrangements and for policy makers considering four-day workweek legislation