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This paper investigates the effects of layoff announcement by customers on the valuation and operating performance of their supply chain partners.

The authors collect corporate layoff announcements from 8-K filings submitted by US publicly-traded firms from 2004 to 2017. Using event study methodology, they examine the information externality of corporate layoffs on announcing firms' suppliers.

Results show that suppliers, on average, experience a negative stock price reaction around their major customers' layoff announcements. The negative price effect is exacerbated when industry rivals of layoff-announcing customers also suffer from negative intra-industry contagion effects. Additionally, supply chain spillover effects are asymmetric, with only “bad news” layoff announcements causing significant value implications for suppliers, but not “good news” announcements. Supplier firms also reduce their investments in and sales dependence on layoff-announcing customers in subsequent years.

This study shows that layoff decisions, often aimed at improving firms' efficiency and effectiveness, create uncertainty for the suppliers' operation and cause negative value implications on firms' upstream partners. Findings should be useful to corporate decision-makers in making layoff decisions.

This paper is one of the first to address the value implications of corporate layoffs on announcing firms' suppliers. It provides a more comprehensive picture of the economy-wide impact of achieving efficiency through employee layoffs.

The authors examine the short-term stock market reaction surrounding US layoffs during the coronavirus disease 2019 (COVID-19) period. The authors’ specific interest is on any changes that may be observed in US stock markets during the COVID-19 outbreak. This information will help us assess the extent to which policymakers adopted at time revenue and expenditures measures to minimize its negative impact.

The authors study the linkage between layoffs announced by firms and stock markets in US for the COVID-19 period between March 2020 and October 2020. This period shows important economic figures; a huge number of job cuts announced by blue-chip companies listed in the New York Stock Exchange (NYSE) due to widespread economic shutdowns. The authors examine whether and to what extent stock markets in US have reacted to layoff announcements during the COVID-19 pandemic using an event-study methodology.

The study’s results show that US layoffs during the pandemic did not cause any abnormalities on the stock returns, either positive or negative. Based on the mean-adjusted volume, the authors find that layoffs increase the stocks' trading volume, especially on the event date and the day following the event. US stocks become more volatile on the days following the event. Interestingly, on the event date, the authors find that stocks get the highest abnormal volatility; however, the result is statistically insignificant.

The authors suggest that layoffs announcements follow the business cycle quite closely in most industries. The study’s results have implications for investors, regulators and policymakers as they permit to examine the effectiveness of the measures adopted.

The study’s results show that policymakers reduced uncertainty implementing intensive measures quickly and should follow similar policy in the future pandemic and/or unexpected events.

This paper contributes to the literature in two directions: First, to the best of the authors’ knowledge this is the first study that provides empirical evidence and assesses the extent to which a major global shock such as the COVID-19 pandemic may have altered the reaction of US stock markets to layoff announcements. Second, this is the first study on this topic that examines volume and volatility abnormalities, while the authors check the robustness of the findings with different methods to calculate abnormal returns.

Since 1980 U.S. companies have cut more than 43 million jobs through downsizing. That represents layoffs affecting nearly three‐quarters of all U.S. households. Unlike the layoffs of 20 years ago, these cuts are permanent. Historically, layoffs tended to affect line manufacturing workers, but since the mid‐1980s, white‐collar and managerial jobs have been hardest hit. In the largest U.S. firms, 77 percent of the jobs lost since 1989 have been white‐collar jobs (Anfuso, 1996 & Laabs, 1996).

In this study, I explore the link between workforce downsizing and the predominance of a corporate governance model that espouses a shareholder value maximization principle. Specifically, I examine how top managers’ shareholder value orientation affects the adoption of a downsizing strategy among large, publicly traded corporations in the United States. An analysis of CEOs’ letters to shareholders indicates that firms with CEOs who use language that espouses the shareholder value principle tend to have a higher rate of layoffs, after controlling for various indicators of the firm’s adherence to the shareholder value principle. The finding suggests that corporate governance models, particularly those advocated by powerful organizational elites, have a significant impact on workers by shaping corporate strategies toward the workforce. The key actors in this process were top managers who embraced the new management ideology and implemented corporate strategy to pursue shareholder value maximization.

Scholars studying downsizing and performance often concentrate on one aspect of the phenomenon at a time without addressing the totality of factors influencing organizations. The result is that some proclaim improvements from cost trimming and strategic focus, while others assert deterioration in performance due to employee resentment and negative societal reactions. This review integrates disparate findings using the stakeholder theory of the organization, developing a model relating organizational actions to stakeholder evaluations and reactions, which ultimately affect profitability and survival. Research propositions are developed based on evidence from a wide variety of literature bases, including organizational behavior, management, sociology, finance, and medicine. Additionally, implications of this model for future theory and research regarding organizational downsizing are developed.

A prescriptive model for announcing layoffs is presented. The model is based on a thorough literature review and indepth case analysis of eight companies which announced layoffs. Based on the model, ten recommendations for effective layoff announcements are presented and discussed. Because the cases′ analysis revealed that most strategies relating to the announcements were superficial, the major recommendation is to develop a thorough strategy. This model should help to develop an appropriate strategy. The nature of the layoff and organizational dynamics are first considered in this model. Other variables considered are the source of the announcement, the channel used to present the message, the timing of the announcement and the message itself.

Although 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.

The 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.

Findings 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.

This 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.

Traditional employment practices since the Second World War had usually ensured job security for a company’s workforce. However, the increasingly competitive environment and the restructuring of companies in the 1980s and 1990s have made this practice impossible to continue; therefore, layoffs have become a fact of life for employees in an increasing number of industries. The purpose of this study was to examine attitudes in two employment environments, one in which temporary workers were used to shield permanent employees from layoffs and another in which layoff decisions were made without regard to permanent or temporary status. Specifically, examination was made of the relationships among perceived organizational support (POS), organizational commitment, and intention to quit, and the relative levels of these variables across two environments and the two classes of workers. It was found that, as expected, the relationships among the commitment variables and intention to quit were similar within both environments. Also, as expected, levels of commitment in the “shield” environment were higher than in the “layoff” environment; and POS was higher among temporary employees in the “shield” environment than among permanent workers in the “layoff” environment. A particularly interesting finding was that, in the “layoff” environment, POS among temporary workers was higher than among permanent workers.

The purpose of this paper is to provide a theoretical conceptualisation of guilt and the depoliticization of downsizing practices. The authors begin with a critical review of the relevant management literature aiming to establish the discursive normalization and individualization of (un)employment. The authors then use secondary sources to reflect on the downsizing process. A process that, as the authors argue, is distinguished into three separate but interconnected phases: corporate memos (phase 1), termination scripts (phase 2) and the role of outplacement services (phase 3). By examining this process, the aim is to point to the mechanisms through which downsizing practices are neutralized and depoliticized.

This is a conceptual work that provides a systematic overview of the existing management literature on downsizing and guilt. Use of other secondary sources (corporate memos and termination scripts) is also employed to draw links between the discursive normalization of downsizing as identified in the relevant literature and the specific organizational processes and practices implemented by corporations during downsizing. The authors identify common ideas and themes that cut across the relevant literature and the secondary sources and aim to offer a theoretical conceptualisation of guilt and the depoliticization of downsizing practices.

This paper argues that downsizing discourses and practices contribute to the feelings of personal responsibility and self-blame, reinforcing an individualistic understanding of work and unemployment that excludes more structural ones, and that it helps in reproducing the existing structures of power.

The study recognizes that employees’ reactions are not only unpredictable but also constantly evolving, depending on personal and social circumstances. The authors also recognize that the work is based on secondary sources much of which talk about practices in US companies, and thus the authors are and should be cautious of generalizations. The authors hope, however, that the authors will encourage further empirical research, particularly among organization studies and critical management scholars, on downsizing practices and guilt. For the authors’ part, the authors have tried to offer a critical reflection on how guilt is produced through corporate discourses and practices, and the authors believe that further empirical investigation on the three phases of the downsizing process (as identified in our work) and the lived experience of (un)employment is needed. As corporate downsizing discourses and practices frame (un)employment in strictly individualist and behavioral terms, the authors wish to emphasize the need for further theoretical investigation and political contestation. The authors, therefore, hope that the work will contribute to the relevant literature on downsizing practices and open up the discussions around layoff policies and the structural conditions of (un)employment.

The paper shows that downsizing practices and feelings of guilt are strongly linked to and exemplify the “individualization” of social and political issues such as work and unemployment. The authors suggest that individualization signifies, in some sense, a retreat from organized collective resistance and mobilization based upon class and that the prevalence of the ideology of individualism (and its correlative, meritocracy), over alternative explanations and solutions to such public issues, helps in reproducing existing structures of power and inequity.

How employees react to layoffs after a divestiture depend on how they perceive the fairness of the deal.