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Financial constraints and workforce environment: An international investigation

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  • Ahsan Habib
  • Mabel D. Costa
  • Hedy J. Huang
  • Xuan S. Sun

Abstract

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.

Suggested Citation

  • Ahsan Habib & Mabel D. Costa & Hedy J. Huang & Xuan S. Sun, 2021. "Financial constraints and workforce environment: An international investigation," International Review of Finance, International Review of Finance Ltd., vol. 21(3), pages 1056-1067, September.
    • Handle: RePEc:bla:irvfin:v:21:y:2021:i:3:p:1056-1067
    DOI: 10.1111/irfi.12302
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