Cash flow volatility and labor investment efficiency in TSE

Document Type : Original Article

Authors

1 Ph.D. student in accounting, Imam Khomeini International University

2 Associate Professor of Accounting, Imam Khomeini International University, Qazvin

3 MA in Accounting, Islamic Azad University, Qazvin

Abstract

The importance of labor as a vital factor of production in the profit function of a company is undeniable. From an economic point of view, investing in labor force is significant for advanced companies that often have high human capital. Because, they believe that optimal and efficient investment in the labor force can reduce the risks caused by uncertainty and volatility as much as possible. Therefore, the current research examines the effect of the cash flow volatility on labor investment efficiency. To achieve the purpose of the research, the financial information of 161 companies admitted to the Tehran Stock Exchange in the period from the beginning of 2011 to the beginning of 2022, and to test the hypothesis of the research, the multivariable regression method and combined data were used. The findings show that there is a positive and significant relationship between the fluctuation of cash flows and the efficiency of labor investment. Also, the findings in the robustness section of the results showed that this relationship is different in companies with lower financial constraints compared to companies with higher financial constraints. Therefore, it can be said that the existence of fluctuations in cash flows leads to an increase in the efficiency of labor investment.

Keywords

Main Subjects

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History

  • Receive Date: 06 October 2023
  • Revise Date: 09 December 2023
  • Accept Date: 12 December 2023

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