Organizational Downsizing: Its Effect on Financial Performance Over Time
The current study investigated the financial effects of downsizing in Fortune 1000 Companies during a five-year period characterized by continuous economic growth. Return on assets, profit margin, earnings per share, revenue growth, and market capitalization were measured each year between 2003 and...
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| Veröffentlicht in: | Journal of managerial issues 2013-12, Vol.25 (4), p.324-344 |
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| creator | De Meuse, Kenneth P. Dai, Guangrong |
| description | The current study investigated the financial effects of downsizing in Fortune 1000 Companies during a five-year period characterized by continuous economic growth. Return on assets, profit margin, earnings per share, revenue growth, and market capitalization were measured each year between 2003 and 2007. In general, the study found that both downsized and nondownsized companies reported positive financial outcomes during this period. The downsized companies, however, were outperformed consistently by the nondownsized ones during the initial two years following the downsizing. By the third year, these differences became statistically nonsignificant. Consequently, although many companies appear to conduct downsizing because the firm is in dire financial trouble, the results of this study clearly indicated that downsizing does not enhance companies' financial competitiveness in the near-term. The authors discuss the theoretical and practical implications of these findings. |
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Return on assets, profit margin, earnings per share, revenue growth, and market capitalization were measured each year between 2003 and 2007. In general, the study found that both downsized and nondownsized companies reported positive financial outcomes during this period. The downsized companies, however, were outperformed consistently by the nondownsized ones during the initial two years following the downsizing. By the third year, these differences became statistically nonsignificant. Consequently, although many companies appear to conduct downsizing because the firm is in dire financial trouble, the results of this study clearly indicated that downsizing does not enhance companies' financial competitiveness in the near-term. The authors discuss the theoretical and practical implications of these findings.</description><identifier>ISSN: 1045-3695</identifier><identifier>EISSN: 2328-7470</identifier><identifier>CODEN: JMAIE9</identifier><language>eng</language><publisher>Pittsburg: Pittsburg State University</publisher><subject>Analysis ; Business structures ; Corporate profits ; Downsizing ; Earnings per share ; Economic conditions ; Economic development ; Economic recessions ; Economic theory ; Employees ; Employment ; Financial economics ; Financial performance ; Forecasts and trends ; Growth ; Impact analysis ; Influence ; Labor supply ; Layoffs ; Longitudinal studies ; Market capitalization ; Markets ; Productivity ; Profit margins ; Profits ; Revenue ; Revenues ; Statistical significance ; Studies ; Workforce</subject><ispartof>Journal of managerial issues, 2013-12, Vol.25 (4), p.324-344</ispartof><rights>Copyright 2014 Pittsburg State University</rights><rights>COPYRIGHT 2013 Pittsburg State University - Department of Economics</rights><rights>Copyright Pittsburg State University, Department of Economics Winter 2013</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/43489371$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/43489371$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,776,780,799,57992,58225</link.rule.ids></links><search><creatorcontrib>De Meuse, Kenneth P.</creatorcontrib><creatorcontrib>Dai, Guangrong</creatorcontrib><title>Organizational Downsizing: Its Effect on Financial Performance Over Time</title><title>Journal of managerial issues</title><description>The current study investigated the financial effects of downsizing in Fortune 1000 Companies during a five-year period characterized by continuous economic growth. 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The authors discuss the theoretical and practical implications of these findings.</description><subject>Analysis</subject><subject>Business structures</subject><subject>Corporate profits</subject><subject>Downsizing</subject><subject>Earnings per share</subject><subject>Economic conditions</subject><subject>Economic development</subject><subject>Economic recessions</subject><subject>Economic theory</subject><subject>Employees</subject><subject>Employment</subject><subject>Financial economics</subject><subject>Financial performance</subject><subject>Forecasts and trends</subject><subject>Growth</subject><subject>Impact analysis</subject><subject>Influence</subject><subject>Labor supply</subject><subject>Layoffs</subject><subject>Longitudinal studies</subject><subject>Market capitalization</subject><subject>Markets</subject><subject>Productivity</subject><subject>Profit margins</subject><subject>Profits</subject><subject>Revenue</subject><subject>Revenues</subject><subject>Statistical significance</subject><subject>Studies</subject><subject>Workforce</subject><issn>1045-3695</issn><issn>2328-7470</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2013</creationdate><recordtype>article</recordtype><sourceid>N95</sourceid><sourceid>BENPR</sourceid><recordid>eNptz91LwzAQAPAiCs7pnyAUfPHBStJ8NPFNdHODwXyYzyXLLjWjTWbSKu6vt2OCH4zAHXf87rgcJYOc5CIraIGOkwFGlGWES3aanMW4RgjhnKJBMpmHSjm7Va31TtXpo_9w0W6tq-7SaRvTkTGg29S7dGydctr25hmC8aHpK0jn7xDShW3gPDkxqo5w8Z2Hyct4tHiYZLP50_ThfpZVOeMyoyuhtaRYiAIKRY3JqWGUyCVWqr-JSyiw4SKnoJkuJOEAOVOCI6kYRytJhsn1fu8m-LcOYls2Nmqoa-XAd7HEjGGMc0l29OofXfsu9L_cKUIx5ZiLH1WpGkrrjG-D0rul5T3hghecY9qr7ICqwEFQtXdgbN_-428P-P6toLH64MDNr4FlF62D2Idoq9c2VqqL8S-_3PN1bH0oN8E2KnyWlFAhSYHJF8AjmaM</recordid><startdate>20131222</startdate><enddate>20131222</enddate><creator>De Meuse, Kenneth P.</creator><creator>Dai, Guangrong</creator><general>Pittsburg State University</general><general>Pittsburg State University - Department of Economics</general><general>Pittsburg State University, Department of Economics</general><scope>N95</scope><scope>XI7</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>4S-</scope><scope>4T-</scope><scope>4U-</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X5</scope><scope>7XB</scope><scope>87Z</scope><scope>88C</scope><scope>88G</scope><scope>8A3</scope><scope>8FI</scope><scope>8FJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>FYUFA</scope><scope>F~G</scope><scope>GHDGH</scope><scope>GNUQQ</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>M0T</scope><scope>M2M</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PRINS</scope><scope>PSYQQ</scope><scope>Q9U</scope><scope>S0X</scope><scope>7TA</scope><scope>8FD</scope><scope>JG9</scope></search><sort><creationdate>20131222</creationdate><title>Organizational Downsizing: Its Effect on Financial Performance Over Time</title><author>De Meuse, Kenneth P. ; Dai, Guangrong</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-g2569-4d8cc941887e7a4ff24f5439b1aa00169e71f6824ec5c7936ee25a8609a560d93</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2013</creationdate><topic>Analysis</topic><topic>Business structures</topic><topic>Corporate profits</topic><topic>Downsizing</topic><topic>Earnings per share</topic><topic>Economic conditions</topic><topic>Economic development</topic><topic>Economic recessions</topic><topic>Economic theory</topic><topic>Employees</topic><topic>Employment</topic><topic>Financial economics</topic><topic>Financial performance</topic><topic>Forecasts and trends</topic><topic>Growth</topic><topic>Impact analysis</topic><topic>Influence</topic><topic>Labor supply</topic><topic>Layoffs</topic><topic>Longitudinal studies</topic><topic>Market capitalization</topic><topic>Markets</topic><topic>Productivity</topic><topic>Profit margins</topic><topic>Profits</topic><topic>Revenue</topic><topic>Revenues</topic><topic>Statistical significance</topic><topic>Studies</topic><topic>Workforce</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>De Meuse, Kenneth P.</creatorcontrib><creatorcontrib>Dai, Guangrong</creatorcontrib><collection>Gale Business: Insights</collection><collection>Business Insights: Essentials</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>BPIR.com Limited</collection><collection>Docstoc</collection><collection>University Readers</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Entrepreneurship Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Healthcare Administration Database (Alumni)</collection><collection>Psychology Database (Alumni)</collection><collection>Entrepreneurship Database (Alumni Edition)</collection><collection>Hospital Premium Collection</collection><collection>Hospital Premium Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Business Premium Collection (Alumni)</collection><collection>Health Research Premium Collection</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>Health Research Premium Collection (Alumni)</collection><collection>ProQuest Central Student</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>Healthcare Administration Database</collection><collection>ProQuest Psychology</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central China</collection><collection>ProQuest One Psychology</collection><collection>ProQuest Central Basic</collection><collection>SIRS Editorial</collection><collection>Materials Business File</collection><collection>Technology Research Database</collection><collection>Materials Research Database</collection><jtitle>Journal of managerial issues</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>De Meuse, Kenneth P.</au><au>Dai, Guangrong</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Organizational Downsizing: Its Effect on Financial Performance Over Time</atitle><jtitle>Journal of managerial issues</jtitle><date>2013-12-22</date><risdate>2013</risdate><volume>25</volume><issue>4</issue><spage>324</spage><epage>344</epage><pages>324-344</pages><issn>1045-3695</issn><eissn>2328-7470</eissn><coden>JMAIE9</coden><abstract>The current study investigated the financial effects of downsizing in Fortune 1000 Companies during a five-year period characterized by continuous economic growth. Return on assets, profit margin, earnings per share, revenue growth, and market capitalization were measured each year between 2003 and 2007. In general, the study found that both downsized and nondownsized companies reported positive financial outcomes during this period. The downsized companies, however, were outperformed consistently by the nondownsized ones during the initial two years following the downsizing. By the third year, these differences became statistically nonsignificant. Consequently, although many companies appear to conduct downsizing because the firm is in dire financial trouble, the results of this study clearly indicated that downsizing does not enhance companies' financial competitiveness in the near-term. The authors discuss the theoretical and practical implications of these findings.</abstract><cop>Pittsburg</cop><pub>Pittsburg State University</pub><tpages>21</tpages></addata></record> |
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| source | Jstor Complete Legacy |
| subjects | Analysis Business structures Corporate profits Downsizing Earnings per share Economic conditions Economic development Economic recessions Economic theory Employees Employment Financial economics Financial performance Forecasts and trends Growth Impact analysis Influence Labor supply Layoffs Longitudinal studies Market capitalization Markets Productivity Profit margins Profits Revenue Revenues Statistical significance Studies Workforce |
| title | Organizational Downsizing: Its Effect on Financial Performance Over Time |
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