Market reactions to announcements of corporate downsizing actions and implementation strategies

Nixon, Robert D.; Hitt, Michael A.; Lee, Ho-Uk; Jeong, Eui Seob

doi:10.1002/smj.423

Cited by 121 publications

(174 citation statements)

References 32 publications

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“…This increases the likelihood of making poor hires and, as a consequence, may increase the rate of dismissals. Dismissals might also be viewed as necessary to sustain or improve performance (Nixon, Hitt, Lee, & Jeong, 2004) and may be more likely to occur when agentic behaviour is prevalent.…”

Section: Dismissalsmentioning

confidence: 99%

Are Family Firms Good Employers?

Neckebrouck

Schulze

Zellweger

2018

AMJ

188

174

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Family firms employ about 60 percent of the global workforce. While it is widely assumed that they are good employers, data about their conduct is mixed. In this study, we extend stewardship and agency theories to test competing propositions about the impact of family on employment practices using data from 14,961 private Belgian firms over a 19-year period. Higher investments, lower dividend payout, and higher risk tolerance indicate that family firms are better financial stewards of their companies than nonfamily firms. However, family firms are worse organizational stewards than nonfamily firms: They offer lower compensation, invest less in employee training, and exhibit higher voluntary turnover and lower labor productivity. Further, and contrary to earlier research, we find that financial practices in private family firms do not change over time, and that the deleterious influence of family on employment practices rises with both firm age and with heightened family involvement. Together, our findings suggest that a more nuanced understanding of stewardship and agency theory is needed to understand the impact of family on the governance of private firms

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Section: Dismissalsmentioning

confidence: 99%

Are Family Firms Good Employers?

Neckebrouck

Schulze

Zellweger

2018

AMJ

188

174

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“…In this setting, implementing small amounts of downsizing, managers are less likely to go beyond the optimal "right size" and, this way, will be able to avoid less desirable performance outcomes (Hitt et al, 2004).…”

Section: The Amount Of Downsizingmentioning

confidence: 99%

“…the business press as charges against current profits, especially executive severance (Dalton et al, 1993;Nixon et al, 2004). In addition to direct charges against short-term profits disengagement incentives may also have a negative impact on longer-term performance.…”

Section: The Use Of Disengagement Incentivesmentioning

confidence: 99%

“…As regards non-pecuniary effects from disengagement incentives, when the cost of leaving for valuable employees (those which the organization desires to retain) is also reduced, the valuable employee may also depart due to disengagement incentives (Hitt et al, 1994;Nixon et al, 2004) 5 . Valuable employees are in possession of firm-specific skills.…”

Section: The Use Of Disengagement Incentivesmentioning

confidence: 99%

“…One advantage of relying on newspaper announcements is that they usually include information on the level of the intended reduction (Nixon et al, 2004). We mined the BARATZ database from 1995 to 2001 -which provides information on headlines and a summary of news published in different national and regional newspapers -and analysed downsizing announcements published in two of the most widely circulated business publications in Spain -Expansion and Cinco Dias.…”

Section: Data Collectionmentioning

confidence: 99%

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Downsizing implementation and financial performance

Muñoz‐Bullón

Sánchez-Bueno

2010

Management Decision

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In the present study we explore the relationship between downsizing decisions and corporate financial performance after top management has decided to downsize. Our focus is on the financial consequences arising from the amount of downsizing and the use of disengagement incentives. For this purpose, we use a sample of downsizing announcements in the Spanish press from 1995 up to 2001. Although the results show that the amount of downsizing is not significantly related to post-downsizing profitability, the evidence provided supports the finding that the use of disengagement incentives (which motivate workers to leave the organization) is negatively related to firm performance. Our analysis helps to understand the role that strategic downsizing decisions play in explaining observed variance in the performance of downsized firms. Thus, it advances scholarly organizational research by reinforcing the concept that corporate performance is not only contingent on strategies, but also influenced by the means through which these strategies are implemented.

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Hidden Costs of Downsizing

Polizzi¹

2011

Winning CFOs

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Market reactions to announcements of corporate downsizing actions and implementation strategies

Cited by 121 publications

References 32 publications

Are Family Firms Good Employers?

Are Family Firms Good Employers?

Downsizing implementation and financial performance

Hidden Costs of Downsizing

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