| Summary: | 碩士 === 國立中央大學 === 人力資源管理研究所 === 102 === This study aims to exam downsizing effect on firm performance when considering companies’ characteristics including R&;D intensity, growth rate and capital intensity. This article proposes that proportion of outside directors and proportion of executive incentive pays are determinations of downsizing. Accounting for endogeneity, this study uses treatment-effect model to control self-selection bias.
There are 698 listed companies from Taiwan Economics Journal database (TEJ) in samples. This study collects data from 2008 to 2009 to measure downsizing. This was the period when corporations confronted economic downturn caused by financial crises. It is found that about 41.1% companies had downsized at that time. Performance change is measured by the difference of prior averaged ROA (2007 to 2009) and averaged ROA after downsizing (2010 to 2012).
This study validates positive effect of downsizing on performance change. It is found that results from OLS regression and treatment-effect model are different, showing that self-selection bias significantly influences downsizing effect on performance change. In addition, this study shows that R&;D intensity positively moderates downsizing effect on performance change. Moreover, proportion of executive pays is positively related to tendency of downsizing.
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