Outsourcing implications on companies’ profitability and liquidity: a sample of UK companies

Ahmad H. Juma’h (Ahmad H. Juma’h is an Associate Professor of Accounting at Interamerican University, San Juan, Puerto Rico.)
Douglas Wood (Douglas Wood is NatWest Professor of Banking and Finance, Manchester Business School, Manchester, UK.)

Work Study

ISSN: 0043-8022

Publication date: 1 December 2000

Abstract

This article investigates the business performance of a sample of companies announcing outsourcing contracts. Performance effects are investigated by measures including operating profit, earnings margin, return on shareholders’ capital, reduction in employment cost and research and development expenditure prior to and subsequent to the outsourcing announcement. The conclusion is that outsourcing companies’ profitability and liquidity decrease in years in which outsourcing announcements occur, and tend to increase in the subsequent year. Also, it is possible that the short‐term and long‐term financial structure of outsourcing companies is altered.

Keywords

Citation

Juma’h, A. and Wood, D. (2000), "Outsourcing implications on companies’ profitability and liquidity: a sample of UK companies", Work Study, Vol. 49 No. 7, pp. 265-275. https://doi.org/10.1108/00438020010350220

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Publisher

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MCB UP Ltd

Copyright © 2000, MCB UP Limited

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