Layoffs and Corporate Performance : Evidence Based on the US Tech Industry

This study investigates the impact of mass workforce reductions on the performance of publicly traded US tech firms from Q1-2020 to Q1-2023, being robust to multiple proxies across four performance parameters. Findings reveal decreased investment and operating performance during layoff quarters, accompanied by elevated payout and financing activities. However, a marginal enhancement in operating performance is observed in one quarter following dismissals, with reduced investments, payout, and financing performance. Furthermore, this study delves into the cash-holding behavior of firms during both downsizing quarters and the immediate subsequent quarters, while exploring the moderating role of prior firm performance within layoff quarters