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Case study: Downsizing strategy influence on the structure of the firm

Alfonso Herrero de E. E. de los Monteros orcid.org/0000-0002-4126-1501 ; Faculty of economics & entrepreneurial sciences, Dept. of applied economy & statistics
Carmen S. Bravo orcid.org/0000-0002-4018-7645 ; Telefonica S.A.

Abstract

This case study analyzes the effectiveness of the downsizing strategy in the Telefonica through the Event Study method. An eventstudy is designed to examine market reactions to excess returns around specific information events. The information events can be market-wide, such as macroeconomic announcements, or firm specifics, such as downsizing announcements. The question of whether the excess returns around the announcements are different from 0 is answered by estimating the t statistic for each day, by dividing the average excess return by the standard error. If the t statistics are statistically significant, the event affects the returns; the sign of the excess of returns determines whether the effect is positive or negative. Teaching notes for each section are included.

Keywords

Downsizing; Event study; Excess of returns; Downscoping; Telefónica S.A

Hrčak ID:

83476

URI

https://hrcak.srce.hr/83476

Publication date:

21.6.2012.

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