Written in the wake of the 2007-08 financial crisis, the following essays explore the nature and implications of firm-level financial distress. The first essay examines the external effects of financial distress, while the second and third essays examine its internal consequences. The first essay investigates the potential contagion effects of financial distress among retail firms using a novel measure of retailers' geographic exposure to one another and, in particular, to liquidated chain stores. The second essay draws on new, hand-collected data on firm-level layoff instances to look into the ways in which financial distress impinges on firms' employment behavior. Building on the second essay, the third essay considers financial market reactions to layoff decisions, particularly those resulting from financial strain. Each essay sheds additional light on the ways in which financial distress propagates through to affect the economy at large. Overall, the picture that emerges is one in which firm-level financial distress appears to be an important factor behind the long and protracted nature of the current economic recovery. / Economics

In today’s business environment, cost-cutting practices such as downsizing and layoffs remains a widespread phenomenon. Although, the understanding of the effects that these practices has on the remaining individuals, defined as the survivors, is poor. The focus in this paper is therefore to examine how survivors of layoffs can be affected on an individual level, and by what causes. The study was conducted using open-ended, qualitative interviews with three individuals with different experiences of layoffs. The empirical data was analyzed by extracting quotations from the interviews. The study found that layoffs affected the morale and attitude towards management of the individual, and that perceived justice and uncertainty are two causes of negative effects from layoffs.

Due to rising unemployment levels, researchers have begun to investigate how corporations handle layoffs and how they could manage them better in the future. Public relations practitioners can use this type of research to help organizations learn how to best maintain their images, reputations and productivity amid mass layoffs. When an organization conducts mass layoffs, its actions become both a current event and a public issue that is frequently discussed in newspaper articles. In order for downsizing organizations to be aware of the public?s perceptions of their layoff procedures, they should be aware of how the news media represents them. This study used a content analysis of different newspaper articles to determine how three downsizing organizations (General Motors, Caterpillar, and Boeing) were portrayed in the midst of mass layoffs. This study examined a sample of newspaper articles from two nationally-distributed daily newspapers (The New York Times and The Washington Post). It also included articles from daily newspaper that were located in the cities where the layoffs took place (The Detroit News, The Chicago Tribune, and The Seattle Times). The findings did not show that the newspapers? articles about the layoffs tended to be more prominent in the regional publications than in the national publications. While the articles were often prominently placed in the newspapers, the layoffs were not typically the primary focus of the articles. The reporters frequently included details of the layoffs, such as the number of layoff victims, in their articles. They also frequently included attributions of blame for the layoff decisions. The articles, however, rarely discussed socially responsible actions made on behalf of the downsizing companies.

This dissertation consists of three essays on Finance and Innovation. The first essay argues that openness of research inputs can enable greater exploration of new research lines, particularly by academic researchers. We test this hypothesis by examining a natural experiment: NIH agreements that reduced the access costs imposed on academics regarding certain genetically engineered mice. We find that increased openness encourages the exploration of more diverse research paths, and does not reduce research into the creation of new genetically engineered mice. Overall, our findings highlight a neglected cost of strong intellectual property restrictions: lower levels of exploration leading to a reduction in the diversity of research output. The second essay analyzes clustering in firms’ layoff behavior and its links to financial markets. We develop a model in which managers delay layoffs during good economic states to avoid damaging their reputation. We test the model’s predictions by comparing the layoff behavior of publicly-listed and privately-held firms, and find that the layoffs of public firms are twice as sensitive to recessions. In addition, we find that the firms which cluster layoff announcements at high frequencies are also more likely to engage in mass layoffs during recessions. Our findings suggest that reputation management is an important driver of layoff policies both at daily frequencies and over the business cycle, and can have significant macroeconomic consequences. The third essay explores the relationship between funding availability and innovative output. I develop a theory of credit constraints in multi-stage research, and predict that greater funding leads to both transitions into the private sector and a shift toward shorterhorizon projects. Analyzing the patent output of a panel of life-science researchers linked to top universities, I find that greater funding availability leads to an increase in transitions from academia to the private sector and a higher quantity of patent output, but a decrease research value, innovative scope, and the time horizon of subsequent applications. These results indicate that profit-motivated funding not only increases the quantity of innovation, but also leads to a significant shift in the type of projects being pursued.

I explore the passage of wrongful discharge laws by U.S. state courts that allow workers to sue employers for unjust dismissal as an exogenous increase in employee firing costs. I find that firms reduce debt ratios following the adoption of these laws, and this result is strongest for subsamples of firms that experience larger increases in expected firing costs. Following the passage of these laws, firms also increase cash holdings, firms save more cash out of cash flows, and investors place a higher value on each additional dollar of cash holdings. Overall, my results indicate that employee firing costs can have an important impact on corporate financial policy decisions.

<p>Under en lågkonjunktur använder sig många företag av varsel och uppsägningar som ett sätt att minska kostnader och möta en vikande efterfrågan. Dessa uppsägningar innebär en förändring vilket är något som ofta möts av motstånd. I den här uppsatsen belyses de problem en ledare ställs inför i samband med en förändring som innebär uppsägningar och hur de har valt att genomföra dem.</p><p>Syftet med den här uppsatsen är att beskriva hur tre ledare i tre olika organisationer genomför uppsägningar som sker till följd av arbetsbrist.</p><p>En kvalitativ metod har använts där vi genomfört tre halvstrukturerade intervjuer med ledare som haft insyn i beslutsprocessen från varsel fram till uppsägningar och varit de som till största del förmedlat besluten till berörda individer. Med insamlad empirisk data analyserades hur ledarna genomförde uppsägningarna utifrån teori som behandlar förändring, ledarskap och ett företags situation.</p><p>Resultaten visade att trots liknande yttre förutsättningar i form av lågkonjunktur och vikande orderingång så skilde sig genomförandet av förändringen mellan de tre företagen. En likhet var att kommunikation varit en viktig strategi under processen. I samtliga fall var ledarskapet dessutom säkert, direkt och beslutsamt.</p><p> </p> / <p>During a recession, many companies are using layoffs as a way to reduce costs and meet declining demand. These layoffs mean changes, which is often met with resistance. This thesis highlights the problems a leader is faced with during a change involving layoffs and how they have chosen to implement the same.</p><p>The purpose of this thesis is to describe how three leaders in three different organizations implement layoffs occurring as a result of shortage of work.</p><p>The research used is semi-structured interviews with three leaders who have taken part in the decision-making process of the layoffs. They have been, for the most part, responsible for conveying the decisions to the employees concerned. The collected empirical data was analyzed on the basis of theory dealing with organizational change, leadership and situational variables in order to understand how the layoffs have been carried out.</p><p>The results showed that despite similar external environment in terms of recession and declining order, the implementation was different between the three companies. One similarity was that communication was an important strategy in the process. In each case the leadership was also secure, direct and decisive.</p>

Under en lågkonjunktur använder sig många företag av varsel och uppsägningar som ett sätt att minska kostnader och möta en vikande efterfrågan. Dessa uppsägningar innebär en förändring vilket är något som ofta möts av motstånd. I den här uppsatsen belyses de problem en ledare ställs inför i samband med en förändring som innebär uppsägningar och hur de har valt att genomföra dem. Syftet med den här uppsatsen är att beskriva hur tre ledare i tre olika organisationer genomför uppsägningar som sker till följd av arbetsbrist. En kvalitativ metod har använts där vi genomfört tre halvstrukturerade intervjuer med ledare som haft insyn i beslutsprocessen från varsel fram till uppsägningar och varit de som till största del förmedlat besluten till berörda individer. Med insamlad empirisk data analyserades hur ledarna genomförde uppsägningarna utifrån teori som behandlar förändring, ledarskap och ett företags situation. Resultaten visade att trots liknande yttre förutsättningar i form av lågkonjunktur och vikande orderingång så skilde sig genomförandet av förändringen mellan de tre företagen. En likhet var att kommunikation varit en viktig strategi under processen. I samtliga fall var ledarskapet dessutom säkert, direkt och beslutsamt. / During a recession, many companies are using layoffs as a way to reduce costs and meet declining demand. These layoffs mean changes, which is often met with resistance. This thesis highlights the problems a leader is faced with during a change involving layoffs and how they have chosen to implement the same. The purpose of this thesis is to describe how three leaders in three different organizations implement layoffs occurring as a result of shortage of work. The research used is semi-structured interviews with three leaders who have taken part in the decision-making process of the layoffs. They have been, for the most part, responsible for conveying the decisions to the employees concerned. The collected empirical data was analyzed on the basis of theory dealing with organizational change, leadership and situational variables in order to understand how the layoffs have been carried out. The results showed that despite similar external environment in terms of recession and declining order, the implementation was different between the three companies. One similarity was that communication was an important strategy in the process. In each case the leadership was also secure, direct and decisive.

Studien ämnar till att skapa en profil för tre olika empirinära perspektiv, vilka alla spelar en roll före, under och efter en nedskärningsprocess. Dessa tre perspektiv är: ledningsperspektivet, perspektivet för kvarvarande anställda och uppsagda arbetare. Författaren lägger tyngd på den tidigare vetenskapliga forskningen som får agera likt en mall för hur en optimal hantering ska ske under en nedskärningsprocess. Syftet med studien är att detektera bristande överrensstämmelser mellan perspektiven som förhindrar att hanteringen blir optimal för alla parter, samt kunna se om teorin används i det praktiska utövandet.Ledarskapsperspektivet är representerat i två underkategorier: sekundärintervjuer och expertintervjuer. I sekundärintervjuerna så presenteras svar från auktoriteter inom området som förmedlar den erfarenhetsbaserade kunskapen; medan i expertintervjuerna presenteras svar från fyra olika, representerade, företag inom olika branscher i Borlänge. Perspektivet för kvarvarande anställda representeras av en enkätundersökning och en djupare intervju med en kvarvarande anställd. Det tredje empirinära perspektivet, för uppsagda arbetare, representeras av en enkätundersökning och en djupare intervju med en uppsagd arbetare.I resultatet så visar det sig att författaren har kunnat detektera bristande överrensstämmelser på flera punkter, främst inom den uppfattade kommunikationen, mellan perspektiven. Detta tolkas som att de framlagda teorierna inte följs av praktiken och därför råder det ingen optimal situation för något av de representerade perspektiven.

Millions of Americans were terminated from their employment in massive layoffs in 2013, which not only created outrage among employees. but also opened the door for retaliatory lawsuits. However, profitable companies are still engaged in restructuring and layoffs, which have a negative effect on employees, managers, and survivors. Such actions create mistrust in management and continue to plague the workforce and the economy. The purpose of this phenomenological study was to explore the impacts that layoffs and downsizing have on employees' trust, work performance, behavior, and health. Informed by Sarker's theory on management and employee trust, the research questions explored participants' work attitudes and performances after layoffs had taken place. Twenty participants, both managers and workers who were laid off or who had survived layoffs, took part in semistructured interviews. The data were coded and analyzed using comparative analysis. The results showed (a) most employees do not trust management, (b) stress and low morale were the most common effects from layoffs, and (c) employee productivity was limited during and after the downsizing process. The study can contribute to positive social change by identifying ways for company leaders to manage impacts of layoffs and implement effective organizational communication strategies that may result in reduced stress for laid off employees and a more productive work environment for surviving employees and managers.

Finance, economic and management literature document the reduced agency problems, increased productivity, and greater financial benefits that accrue to firms that adopt Employee Stock Ownership Plans, (ESOPs). The literature also documents the increased agency problems, decreased employee productivity, and poor operating performance that usually accompany corporate downsizing activity. To date, none of the studies have examined the effect that downsizing decisions have on companies with existing ESOP plans; this dissertation fills that empirical void. In this study, two essays are presented that examine the effect of corporate downsizing on ESOP versus non-ESOP firms. In the first essay, I investigate the short-term wealth effects of the downsizing announcement using event study methodology. I find that there is no significant change in the wealth effects for ESOP firms (they are positive, yet small), whereas non-ESOP firms have significantly negative abnormal returns. There is, however, a significant difference in the abnormal returns of ESOP versus non-ESOP firms, where ESOPs have significantly higher abnormal returns. Finally, with respect to wealth effects, I find that downsizing interacts negatively with managerial ownership and with employee ownership, but there is a positive interaction between the ownership of managers and employees.In the second essay, I examine the long-term employee productivity and financial performance of the downsized firms, as measured by Total Factor Productivity (TFP) and Tobins Q, respectively. I find that neither the percentage of employee ownership nor the level of downsizing has an impact on the productivity of the downsizing ESOP firm. However, the level of downsizing exerts a significantly positive impact on the productivity of non-ESOP firms. With respect to financial performance, the existence of an ESOP plan has a significantly negative influence on the Tobins Q of the downsizing firm. Furthermore, the level of downsizing has a significantly negative impact on non-ESOP firms, whereas the financial performance of ESOP firms appear to be unaffected by the level of downsizing. For Tobins Q, there is evidence of interaction between employee and managerial ownership for ESOP firms. There is also interaction between managerial ownership and downsizing for the TFP and Tobins Q of non-ESOP firms.