Professor Alexander Himme (KLU) and Ann-Christine Schulz (Freie Universität Berlin) co-authored the nominated paper entitled How Wall Street Legitimized Corporate Downsizing. Himme and Schulz take a close look at the effects of corporate downsizing announcements on the stock market. Drawing on neo-institutional theory, the paper shows that throughout the 1990s investors increasingly interpreted downsizing announcements as evidence that firms were following the path of shareholder value maximization. The paper shows that indeed, stock market reactions to downsizing announcements are not uniform over time but followed a positive linear trend. “With this paper, we are contributing to the research on the downsizing-performance relationship,” Himme explained. “We’d like to help solve the puzzle of why managers widely adopted ‘corporate diets’ despite their ambiguous long-term performance effects.”
The SMS annual conference will take place in Berlin from September 17 - 20. The winner of the Best Conference Paper Award will be announced during the conference.