The moderating role of education and R&D expenses on the relationship between labor investment efficiency and operating cash flow volatility: Evidence from listed company on TSE (Tehran Stock Exchange)

Purpose: Cash flows have a significant impact on various factors including labor investment efficiency. In this regard, Beladi et al. (2021) show that companies facing cash flow risk are likely to increase current labor investment to reduce future financing costs. Delays in labor investment expose the firm to additional risks associated with uncertain cash flows and potentially reduce its ability to finance existing projects (Boyle & Guthrie, 2003). However, due to the lack of sufficient research on this issue in Iran, this research seeks to address this need.
Method: The statistical population for this research includes all firms listed on the Tehran Stock Exchange from 2015 to 2022. Data necessary for this study was gathere from the information bank of the Tehran Stock Exchange and Securities Organization (Codal) and Rahvard Novin software. Excel software was utilized for data collection and organization, while SPSS and Eviews were used to test hypotheses and analyze findings. This research follows an event study design, with the t-test being the most commonly used statistical test for such studies. The study focuses on evaluating legal requirements in the capital market by examining transaction volumes, announcements for news conferences, clarification of stock price fluctuations, dispelling of rumors, and trading symbol suspensions This research examines the moderating role of education and research and development costs on the relationship between the efficiency of labor investment and the fluctuations of operating cash flow of companies that are admitted to the stock exchange. In terms of goals, this research is practical and in terms of methodology, it is a type of post-event research. The statistical population includes all the companies that have been admitted to the Tehran Stock Exchange and the systematic elimination method has been used for selection. 1396 to 1400 were investigated.To collect information, a library method was used and the research hypotheses were tested using the panel data model and multiple linear regression.
Findings: Research findings show that operating cash flow fluctuations have a significant effect on the efficiency of labor investment, and employee training costs have a significant effect on the relationship between labor investment efficiency and operating cash flow fluctuations, as well as research and development costs on the relationship between efficiency. Labor investment and operating cash flow fluctuations have a significant effect.
Conclusion: The greater the volatility of operating cash flow, the greater the efficiency of labor investment. In other words, companies facing cash flow risk are likely to increase current labor investment to avoid high financing costs in the future; because fluctuations in cash flow increase the company's risk and thus affect the risk of companies with inefficient labor investment. Therefore, the results of this research are in line with the research of Habib and Ranasinghe (2022). On the other hand, the second hypothesis of this research was shown that the costs of employee training as a moderator of the relationship between the efficiency of labor investment and the fluctuations of operating cash flow are affected. To give this means that the lower the costs of employee training, the greater the volatility of operating cash flow as the efficiency of labor investment increases. In other words, a company with high cash flow risk is more likely to invest more cautiously in its workforce. It then reduces the costs of employee training to force management to improve the efficiency of workforce investment to increase shareholder value and reduce future financing costs. Therefore, the results of these studies are consistent with Beladi et al. (2021) and Habib and Ranasinghe(2022), because they believe that companies facing cash flow risk are likely to increase current workforce investment to avoid high financing costs in the future. Avoid, because fluctuations in cash flow increase the company's risk and thus affect the risk of companies with inefficient labor investment. Meanwhile, the third hypothesis of the current research shows that research and development costs as a moderator affect the relationship between labor investment efficiency and operating cash flow fluctuations. This means that when faced with cash flow risk, company managers try to maximize R&D expenses by effectively investing in labor to increase the value of the firm, because the ability of investments from R&D expenses is highly dependent on cash flow. And is quite sensitive to cash flow fluctuations.