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Financial constraints and workforce environment: An international investigation
Author(s) -
Habib Ahsan,
Costa Mabel D.,
Huang Hedy J.,
Sun Xuan S.
Publication year - 2021
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12302
Subject(s) - workforce , business , legislation , finance , investment (military) , accounting , labour economics , economics , economic growth , political science , politics , law
We examine the association between financial constraints and workforce environment. Using data from 43 countries for the period 2002–2017, we find that financially constrained firms tend to have poor workforce environments. In addition, we investigate the impact of country‐level employment protection legislation (EPL) on this association. It is evident from our results that the investment decisions of firms under financial constraints are conditional on the strictness of EPL. Our findings provide important practical implications for international policy makers, in particular, about the significance of EPL for workforce environments. Our study also contributes to the scant literature on the determinants of workforce environment and provides robust international evidence on the detrimental effects of financial constraints on workforce environments.