An analytical approach for making management decisions concerning corporate restructuring

Beixin Lin, Zu-Hsu Lee and Richard Peterson
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Beixin Lin: Department of Accounting, Law, and Taxation, Montclair State University, 1 Normal Ave., Montclair, NJ 07043, USA, Postal: Department of Accounting, Law, and Taxation, Montclair State University, 1 Normal Ave., Montclair, NJ 07043, USA
Zu-Hsu Lee: Department of Management and Information Systems, Montclair State University, NJ, USA, Postal: Department of Management and Information Systems, Montclair State University, NJ, USA
Richard Peterson: Department of Management and Information Systems, Montclair State University, NJ, USA, Postal: Department of Management and Information Systems, Montclair State University, NJ, USA

Managerial and Decision Economics, 2006, vol. 27, issue 8, pages 655-666

Abstract: Internal corporate restructuring activities, such as downsizing, sale or termination of a business line, facility closure, consolidation, or relocation, often occur as part of managerial strategies intended to improve efficiency, control costs, and adapt to an ever-changing business environment. Such actions frequently result in fundamental changes in a business's organization, its strategies, its systems, and its operations. They can unsettle a business and often significantly affect current and future earnings and cash flows. In this paper we propose a novel decision-making model through the use of the dynamic programming technique to illustrate how management can determine the optimal timing and appropriate restructuring actions that maximize the benefits of a restructuring program. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
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