Three Essays on Investment Cashflow Sensitivities and Workforce Dynamics in UK Small and Medium Enterprises (SMEs)

The thesis aims to extend the understanding of investment cashflow sensitivities and workforce dynamics with the interplay of cashflow uncertainty, agency cost, and financing constraints. It comprises three research essays that conduct an empirical investigation of UK SMEs from 2007 to 2021 using panel data estimation techniques. The first essay reveals the sensitivity of abnormal investments to free cashflows. Specifically, SMEs tend to under-invest when their cashflows are below the optimal level due to financing constraints, and they overinvest when cashflows exceed their optimal level due to agency cost issues. The second essay shows that the negative impact of cashflow uncertainty on employment growth intensifies when SMEs face financing constraints. On the contrary, cashflow uncertainty stimulates investment in tangible assets but starts diminishing as financing constraints become more pronounced. Finally, the third essay shows a non-linear relationship between internal cashflows, uncertainty, and investment in both tangible assets and employment growth. The relationship between internal cashflows and investment in tangible assets shows an inverted U-shaped curve, whereas it follows a U-shaped curve for employment growth. The association between cashflow uncertainty and investment in tangible assets and employment growth follows a U-shaped curve. We further find evidence of an adverse impact of financing constraints on the non-linear associations among the variables. These research findings contribute to the knowledge, providing insights for both researchers and SMEs that allow them to navigate these complexities in decision-making and develop appropriate strategies with the available resources in terms of equity and social capital.

Grantor dc:publisher.institution

University of Bradford

Author dc:creator

• Naeem, Sundas

Advisors dc:contributor.advisor

• Akbar, Saeed
• Mousavi, Mahdi

• Financing constraints
• Agency cost
• Systematic literature review
• Investment cashflow sensitivity
• VOSViewer
• Under-investment
• Over-investment
• Cashflow uncertainty
• Employment growth
• Workforce dynamics
• UK small and medium enterprises (SMEs)

Statement dc:rights

• <a rel="license" href="http://creativecommons.org/licenses/by-nc-nd/3.0/"><img alt="Creative Commons License" style="border-width:0" src="http://i.creativecommons.org/l/by-nc-nd/3.0/88x31.png" /></a><br />The University of Bradford theses are licenced under a <a rel="license" href="http://creativecommons.org/licenses/by-nc-nd/3.0/">Creative Commons Licence</a>.

Language dc:language.iso

en

Repository record dc:identifier.uri

https://bradscholars.brad.ac.uk/handle/10454/20926

OAI identifier oai:identifier

oai:bradscholars.brad.ac.uk:10454/20926