IDEAS home Printed from https://ideas.repec.org/a/ijb/journl/v10y2011i1p13-26.html
   My bibliography  Save this article

Downsizing and Profitability: An Empirical Study of Portuguese Firms in 1993¡V2005

Author

Listed:
  • Tania Marques

    (School of Technology and Management, Management for Sustainability Research Center, Polytechnic Institute of Leiria, Portugal)

  • Isabel Suarez Gonzalez

    (Department of Business Administration and Management, University of Salamanca, Spain)

  • Pedro Cruz

    (ISG Business School, CIGEST/ID+ Research Units, Lisbon/Aveiro, Portugal)

  • Manuel Portugal Ferreira

    (Polytechnic Institute of Leiria, GlobADVANTAGE¡XCenter of Research in International Business & Strategy, Portugal)

Abstract

Although firms may resort to downsizing strategies to improve financial performance, the actual outcome of downsizing is inconclusive. Testing a sample of 1,357 Portuguese firms, we conclude that firms that downsize tend to continue to underperform compared to those that do not downsize.

Suggested Citation

  • Tania Marques & Isabel Suarez Gonzalez & Pedro Cruz & Manuel Portugal Ferreira, 2011. "Downsizing and Profitability: An Empirical Study of Portuguese Firms in 1993¡V2005," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(1), pages 13-26, April.
    • Handle: RePEc:ijb:journl:v:10:y:2011:i:1:p:13-26
    as

    Download full text from publisher

    File URL: https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.10-1/pdf/vol_10-1-2.pdf
    Download Restriction: no
    File URL: https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.10-1/abstract/02.html
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peggy M. Lee, 1997. "A comparative analysis of layoff announcements and stock price reactions in the United States and Japan," Strategic Management Journal, Wiley Blackwell, vol. 18(11), pages 879-894, December.
    2. Jody Hoffer Gittell & Kim Cameron & Sandy Lim & Victor Rivas, 2005. "Relationships, Layoffs, and Organizational Resilience: Airline Industry Responses to September 11," EERI Research Paper Series EERI_RP_2005_06, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Vincent L. Barker Iii & Irene M. Duhaime, 1997. "Strategic Change In The Turnaround Process: Theory And Empirical Evidence," Strategic Management Journal, Wiley Blackwell, vol. 18(1), pages 13-38, January.
    4. Kristien Coucke & Enrico Pennings & Leo Sleuwaegen, 2007. "Employee layoff under different modes of restructuring: exit, downsizing or relocation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(2), pages 161-182, April.
    5. Kang, Jun-Koo & Shivdasani, Anil, 1997. "Corporate restructuring during performance declines in Japan," Journal of Financial Economics, Elsevier, vol. 46(1), pages 29-65, October.
    6. E. Geoffrey Love & Nitin Nohria, 2005. "Reducing slack: the performance consequences of downsizing by large industrial firms, 1977–93," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1087-1108, December.
    7. Peter Chalos & Charles J. P. Chen, 2002. "Employee Downsizing Strategies: Market Reaction and Post Announcement Financial Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(5&6), pages 847-870.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saara Tamminen, 2017. "Regional effects or none? Firms' profitability during the Great Recession in Finland," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 33-59, March.
    2. Verdier, Marie-Anne & Boutant Lapeyre, Jennifer, 2023. "The myth of workforce reduction efficiency: The performativity of accounting language," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 90(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Verdier, Marie-Anne & Boutant Lapeyre, Jennifer, 2023. "The myth of workforce reduction efficiency: The performativity of accounting language," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 90(C).
    2. Lars Schweizer & Andreas Nienhaus, 2017. "Corporate distress and turnaround: integrating the literature and directing future research," Business Research, Springer;German Academic Association for Business Research, vol. 10(1), pages 3-47, June.
    3. Schulz, Ann-Christine & Johann, Sarah, 2018. "Downsizing and the fragility of corporate reputation: An analysis of the impact of contextual factors," Scandinavian Journal of Management, Elsevier, vol. 34(1), pages 40-50.
    4. Park, Choelsoon & Kim, Seonghoon, 2008. "Corporate governance, regulatory changes, and corporate restructuring in Korea, 1993-2004," Journal of World Business, Elsevier, vol. 43(1), pages 66-84, January.
    5. Santiago Velásquez & Juho Kanniainen & Saku Mäkinen & Jaakko Valli, 2018. "Layoff announcements and intra-day market reactions," Review of Managerial Science, Springer, vol. 12(1), pages 203-228, January.
    6. David Hillier & Andrew Marshall & Patrick McColgan & Samwel Werema, 2007. "Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3‐4), pages 467-494, April.
    7. Kihun Kim & Zulfiquer Ali Haider & Zhenyu Wu & Junsheng Dou, 2020. "Corporate Social Performance of Family Firms: A Place-Based Perspective in the Context of Layoffs," Journal of Business Ethics, Springer, vol. 167(2), pages 235-252, November.
    8. Jose L. Barbero & Alicia Ramos & Catherine Chiang, 2017. "Restructuring in dynamic environments: a dynamic capabilities perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(4), pages 593-615.
    9. Berninger, Marc & Gärtner, Henrik & Schiereck, Dirk, 2018. "Kapitalmarktreaktionen auf die Ankündigung von Personalabbauplänen – ein Überblick über drei Jahrzehnte empirische Evidenz," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 72(4), pages 289-325.
    10. Franco GANDOLFI & Magnus HANSSON, 2015. "A Global Perspective on the Non-Financial Consequences of Downsizing," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 16(2), pages 185-204, May.
    11. Alexandra Bertschi-Michel & Philipp Sieger & Thomas Wittig & Andreas Hack, 2023. "Sacrifice, Protect, and Hope for the Best: Family Ownership, Turnaround Moves, and Crisis Survival," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1132-1168, July.
    12. Zorn, Michelle L. & Norman, Patricia M. & Butler, Frank C. & Bhussar, Manjot S., 2017. "Cure or curse: Does downsizing increase the likelihood of bankruptcy?," Journal of Business Research, Elsevier, vol. 76(C), pages 24-33.
    13. Panos Desyllas, 2009. "Improving performance through vertical disintegration: evidence from UK manufacturing firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 307-324.
    14. repec:cte:wbrepe:wb082805 is not listed on IDEAS
    15. Marie-Anne Verdier, 2014. "Quelles Strategies De Diffusion Pour Les Annonces De Reduction D'Effectifs ? Le Cas Des Entreprises Francaises Cotees," Post-Print hal-01899749, HAL.
    16. Sanja Pekovic & Marcus Wagner & Sebastian Vogt, 2022. "Differential effects of corporate social responsibility on downsizing: Evidence from the United States," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1021-1033, July.
    17. Anand Apte, 2014. "“Impact of Institutional Changes Felt by Faculty Members†: A Study with Reference to Management Institutes in Pune City," Jindal Journal of Business Research, , vol. 3(1-2), pages 1-13, June.
    18. Sangcheol Song, 2014. "Subsidiary Divestment: The Role of Multinational Flexibility," Management International Review, Springer, vol. 54(1), pages 47-70, February.
    19. Hirschey, Mark & Richardson, Vernon J., 2001. "Valuation effects of patent quality: A comparison for Japanese and U.S. firms," Pacific-Basin Finance Journal, Elsevier, vol. 9(1), pages 65-82, January.
    20. Malen, Joel, 2015. "Motivating And Enabling Firm Innovation Effort: Integrating Penrosian And Behavioral Theory Perspectives On Slack Resources," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 49(1), pages 37-54, October.
    21. Ciprian Stan & Mike Peng & Garry Bruton, 2014. "Slack and the performance of state-owned enterprises," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 473-495, June.

    More about this item

    Keywords

    downsizing effects; downsizing performance; financial performance; Portugal;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ijb:journl:v:10:y:2011:i:1:p:13-26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Szu-Hsien Ho (email available below). General contact details of provider: https://edirc.repec.org/data/cbfcutw.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.