Corporate Downsizing: Performance Implications

The study empirically examines the relationship between downsizing - measured by change in size of work force - and its impact on the financial performance of a firm. The literature review indicates that there is no compelling evidence to indicate that downsizing contributes to improved performance. In some cases, there is deterioration of performance. The empirical investigation show that while there is statistically significant improvement in short-term performance, there is no evidence of long-term improvement.