The influence of financial risk on profit-making organizations' provision of training

The purpose of this research was to add to theory by analyzing the relationship of financial risk with the provision of training by profit-making businesses. Organizations' financial management, prospect theory, and internal labor market theory were tested to explain this connection.; The sample consisted of 147 publicly traded firms in 8 Midwestern states. Information about financial risk and organizational resources for each profit-making organization were collected from archival sources. Data about training and internal labor markets were gathered by survey questionnaire.; The relationship between financial risk and training varied according to the type of financial risk. The connection of downside shocks was explained by organizations' financial management and prospect theory. Psychologically-based prospect theory was useful to understand differing relationships of upside versus downside shocks with training. A combination of human capital and financial management explained the consistent relationship of operating leverage with training before- and after-learning the job. Results for the two training variables were inconsistent for both volatility and financial leverage.