| Summary: | 碩士 === 國立中央大學 === 人力資源管理研究所 === 104 === Though the empirical studies on the consequences of employee downsizing have increased significantly over the last decades, the results remain inconclusive. This paper attempts to predict the financial effect of workforce reduction by consolidating economic theory and psychological contract theory to generate a more fundamentally concrete logic in assuming the outcome of downsizing regarding the time frame and financial condition. Collecting data from companies listed on the Taiwan Stock Exchange between 2009 and 2014, the study examined the unbalanced panel data with 742 firms and 3503 observations. The results indicate that the downsizers significantly underperformed the non-downsizers in financial performance in the year of employment restructuring. However, in the 2 years following employee downsizing, the firms that had job cuts significantly outperformed their counterparts. Moreover, the findings indicate that healthy firms that downsize receive negative returns, whereas firms that are financially distressed have superior financial outcomes after downsizing.
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