Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261894 
Year of Publication: 
2021
Citation: 
[Journal:] BRQ Business Research Quarterly [ISSN:] 2340-9436 [Volume:] 24 [Issue:] 2 [Publisher:] Sage Publishing [Place:] London [Year:] 2021 [Pages:] 114-128
Publisher: 
Sage Publishing, London
Abstract: 
During economic downturns, firms file for bankruptcy in an effort to attempt a "turnaround". The objective of this study is to assess the effectiveness of retrenchment strategies in the context of bankruptcy, as the most severe form of crisis. We conducted a longitudinal analysis of a sample of 868 bankrupt Spanish firms during the period 2004-2017. The empirical results show that stakeholder support and deep cost retrenchment increase the likelihood of survival and performance recovery, while aggressive layoffs are detrimental for turning bankrupt firms around. Surprisingly, intense asset retrenchment had no significant effects on firm survival and also pushed performance downward. The findings suggest that retrenchment should not be regarded as a general remedy for firms suffering the most severe of crisis. Bankrupt firms should focus on restoring stakeholder relationships and reducing superfluous expenses, while making employees redundant or selling assets should be evaluated carefully when attempting a turnaround.
Subjects: 
stakeholders
decline
retrenchment
Spain
strategy
Turnaround
JEL: 
M10
G33
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.