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Interaction effects of restructuring decisions on operating profit following performance shocks

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  • Yawson, Alfred

Abstract

This paper examines the interaction effects of restructuring activities for a sample of Australian firms experiencing significant declines in operating performance. Our sample firms respond to performance shocks with both financial and corporate restructuring and they achieve significant improvements in operating profits in each of the first 3 years following the shocks. We find that financial and corporate restructuring have both contemporaneous and lagged impact on operating performance. Most importantly, we show that the interaction of restructuring events has a strong influence on the corporate recovery process. We conclude that financial and corporate restructuring play complementary as well as interactive role in reversing a declining trend in operating profits.

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  • Yawson, Alfred, 2009. "Interaction effects of restructuring decisions on operating profit following performance shocks," Journal of Economics and Business, Elsevier, vol. 61(3), pages 216-237.
    • Handle: RePEc:eee:jebusi:v:61:y:2009:i:3:p:216-237
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    4. Kulwant Singh & Ishtiaq P. Mahmood & Siddharth Natarajan, 2017. "Capital Market Development and Firm Restructuring During an Economic Shock," Organization Science, INFORMS, vol. 28(3), pages 552-573, June.

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