The reluctance to downsize might stem from emotional reluctance of executives to fire people (though self-interest surely plays a role). An aversion to firings and layoffs is an organisational manifestation of loss-aversion. For most managers this is... an activity which they dislike but which is good for shareholders... [Not sure I agree with that bit, obviously!]
Jensen suggested that the emergence of the leveraged buyout (LBO) organisational form has been a useful mechanism for downsizing (and other large changes in governance would help too). An important feature of the LBO is that control shifts to new investors (the LBO partnership), who typically have no emotional attachment to the firm's workers. This element of psychological transfer, and willingness to accept a "loss" from the firm's previous policy, may be central to the success of this kind of restructuring. Of course, the LBO form also offers huge financial incentives to restructure, and to do so rapidly (because of the large debt service burdens). But maybe these large rewards just reflect how emotionally painful downsizing is for most managers.
That makes a lot of sense to me, and demonstrates why unions are right to be fearful of LBOs. The research into organisations also suggests some ideas for how best unions can frame both their relationship with the new owners and, if things turn sour, decisions the new owners make. One for another day though!