Access the full text.
Sign up today, get DeepDyve free for 14 days.
T. Wagar (2009)
Exploring the Consequences of Workforce ReductionCanadian Journal of Administrative Sciences-revue Canadienne Des Sciences De L Administration, 15
J. Brockner, M. Konovsky, Rochelle Cooper-Schneider, R. Folger, Christopher Martin, R. Bies (1994)
Interactive Effects of Procedural Justice and Outcome Negativity on Victims and Survivors of Job LossAcademy of Management Journal, 37
Aneil Mishra, G. Spreitzer (1998)
Explaining How Survivors Respond to Downsizing: The Roles of Trust, Empowerment, Justice, and Work RedesignAcademy of Management Review, 23
L. Grunberg, S. Moore, E. Greenberg (2001)
Differences in psychological and physical health among layoff survivors: the effect of layoff contact.Journal of occupational health psychology, 6 1
Peggy Lee (1997)
A comparative analysis of layoff announcements and stock price reactions in the United States and JapanStrategic Management Journal, 18
Paul Williams, M. Khan, E. Naumann (2011)
Customer dissatisfaction and defection: The hidden costs of downsizingIndustrial Marketing Management, 40
M. Carriger (2016)
To downsize or not to downsize – what does the empirical evidence suggest?Journal of Strategy and Management, 9
R. Pouder, R. Cantrell, Subodh Kulkarni (1999)
The Influence Of Corporate Governance On Investor Reactions To Layoff AnnouncementsJournal of Managerial Issues, 11
J. Brockner, S. Grover, M. Blonder (1988)
Predictors of survivors' job involvement following layoffs: A field studyJournal of Applied Psychology, 73
Herman Aguinis, R. Gottfredson, Harry Joo (2013)
Best-Practice Recommendations for Defining, Identifying, and Handling OutliersOrganizational Research Methods, 16
Nick Collett (2002)
Reactions of the International Stock Exchange to Company Employment Announcements: Redundancies and New JobsJournal of Business Finance & Accounting, 29
M. Brauer (2010)
THE IMPLICATIONS OF MAGNITUDE, TIMING, & REALIZATION OF WORKFORCE DOWNSIZING ON FIRM PROFITABILITY., 2010
Journal of Administrative Science, 14
Michael Gombola, George Tsetsekos (1992)
The Information Content of Plant Closing Announcements: Evidence From Financial Profiles and the Stock Price ReactionFinancial Management, 21
Dan Worrell, W. Davidson, V. Sharma (1991)
RESEARCH NOTES. LAYOFF ANNOUNCEMENTS AND STOCKHOLDER WEALTH.Academy of Management Journal, 34
Deepak Datta, J. Guthrie, Dynah Basuil, Alankrita Pandey (2010)
Causes and Effects of Employee Downsizing: A Review and SynthesisJournal of Management, 36
Julian Atanassov, E. Kim (2009)
Labor and Corporate Governance: International Evidence from Restructuring DecisionsCorporate Finance: Governance
K. Meuse, T. Bergmann, Paul Vanderheiden, Catherine Roraff (2004)
New Evidence regarding Organizational Downsizing and a Firm's Financial Performance: A Long-Term Analysis *Journal of Managerial Issues, 16
C. Trevor, Anthony Nyberg (2008)
Keeping Your Headcount When All About You Are Losing Theirs: Downsizing, Voluntary Turnover Rates, and The Moderating Role of HR PracticesAcademy of Management Journal, 51
G. Filbeck, Shelly Webb (2001)
Information Asymmetries, Managerial Ownership, and the Impact of Layoff Announcements on Shareholder Wealth, 40
Bulletin of Ecological Society of America, 81
Dan Worrell, W. Davidson, Varinder Sharma (1991)
Layoff Announcements and Stockholder WealthAcademy of Management Journal, 34
J. Guthrie, Deepak Datta (2008)
Dumb and Dumber: The Impact of Downsizing on Firm Performance as Moderated by Industry ConditionsOrgan. Sci., 19
Kamel Mellahi, A. Wilkinson (2010)
Slash and burn or nip and tuck? Downsizing, innovation and human resourcesThe International Journal of Human Resource Management, 21
W. Rice (1989)
ANALYZING TABLES OF STATISTICAL TESTSEvolution, 43
T. Wagar (2009)
Factors Affecting Permanent Workforce Reduction: Evidence from Large Canadian OrganizationsCanadian Journal of Administrative Sciences-revue Canadienne Des Sciences De L Administration, 14
S. Mellor (2006)
THE INFLUENCE OF LAYOFF SEVERITY ON POSTLAYOFF UNION COMMITMENT AMONG SURVIVORS: THE MODERATING EFFECT OF THE PERCEIVED LEGITIMACY OF A LAYOFF ACCOUNTPersonnel Psychology, 45
E. Love, Matthew Kraatz (2009)
Character, Conformity, or the Bottom Line? How and Why Downsizing Affected Corporate ReputationAcademy of Management Journal, 52
David Flanagan, K. O'shaughnessy (2005)
The Effect of Layoffs on Firm ReputationJournal of Management, 31
Julie Cagle, A. Sen, James Pawlukiewicz (2009)
Inter-industry differences in layoff announcement effects for financial institutionsJournal of Economics and Finance, 33
K. Meuse, Paul Vanderheiden, T. Bergmann (1994)
Announced layoffs: Their effect on corporate financial performanceHuman Resource Management, 33
C. Ahmadjian, Gregory Robbins (2005)
A Clash of Capitalisms: Foreign Shareholders and Corporate Restructuring in 1990s JapanAmerican Sociological Review, 70
Fayez Elayan, George Swales, B. Maris, James Scott (1998)
Market Reactions, Characteristics, and the Effectiveness of Corporate LayoffsJournal of Business Finance & Accounting, 25
PurposeAlthough the management and financial literature is replete with much research looking at the impact of downsizing on the financial health and market valuation of companies employing this practice, there has been very little attention paid to the size of the downsizing effort and its impact. The purpose of this paper is to try and address this lack by looking at companies that downsized in 2008, considering the relative size of the downsizing, and the ongoing financial health and market valuation of the companies.Design/methodology/approachThe impact of the size or severity of the downsizing event was assessed using various financial measures as well as a measure of market valuation from one to five years after the downsizing event. A data set of 251 companies that were in the Fortune 500 in 2014 and also in the Fortune 500 in 2008, that either did not change or decreased headcount were assessed longitudinally over a five-year period.FindingsFindings indicate that the size or severity of the downsizing did not impact any measures of profitability or efficiency or market valuation, with one exception. The size of the downsizing event was negatively related to return on investment, one year after the downsizing. On the other hand, the size or severity of the downsizing had a positive relationship on the companies’ ability to have enough cash at hand to cover expenses (current ratio) from one to four years after the downsizing.Originality/valueThis work may provide additional support for the “band-aid solution” theory of downsizing, as suggested by Carriger (2016), downsizing may stop the bleeding but does not address the underlying financial or strategic issue leading to the need to downsize. The hope is that this work will better inform scholars and practitioners, providing a more nuanced picture of the impact of downsizing on corporate financial health and market valuation.
Journal of Strategy and Management – Emerald Publishing
Published: Aug 21, 2017
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.