The Impact of Earnings Pressure on Layoff Decisions

This article investigates the impact of investment analyst earnings expectations on corporate downsizing decisions. Drawing on the behavioral theory of the firm, we propose that earnings expectations constitute important “aspirational” levels of performance and that managers utilize corporate downsizing in order to meet these expectations. Drawing on a sample of S&P 100 firms over the 1990-2000 period, we find that the pressures on management to...