Layoffs and corporate performance: evidence based on the US tech industry

This study investigates the repercussions of substantial workforce reductions on the performance of publicly traded US tech firms from 2020Q1 to 2023Q1, 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.