Media reactions to family Firms’ downsizing and upsizing decisions

Abstract

The media is an important stakeholder when firms announce restructuring decisions. We argue that journalists’ reactions vary depending on what is associated with family firms and non-family firms in terms of employment practices and whether it is a negative or a positive restructuring (downsizing vs. upsizing). Both types of restructuring may create a cognitive dissonance with the family firm image. Empirically, we analyze the media reactions to announcements of all major restructuring decisions of family firms and non-family firms based in Germany 2006–2019. The results confirm our hypothesis that family firms are evaluated on average more favorably when announcing a downsizing decision but elicit less favorable coverage of their upsizing decisions (than non-family firms). Our study highlights that, when being evaluated by media stakeholders, there are not only benefits when a firm is associated with specific (mostly positive) characteristics but that the same characteristics can also be a burden in other situations.