THE IMPACT OF DOWNSIZING ON THE BANKRUPTCY OF RUSSIAN COMPANIES

Abstract

Links between staff reductions and the company’s bankruptcyare identified. The empirical base of research included 650 companies (150 bankrupts) in the manufacturing industry and 1,500 companies (410 bankrupts) in the construction industry. The logit model was implemented in the center of a research methodology. According to the research it was revealed that the reduction of staff by 3%, 5%, 7% and 10% leads to the company’s bankruptcy. Moreover, the meaningful factor of bankruptcy is the change in financial, physical and intangible resources used by company to reverse negative consequences of the stuff reduction.

Keywords

• bankruptcy
• forecasting
• staff reduction
• logit model
• company resources
• risk-management