Abstract

This study examines the impact of training and development (T&D) costs on corporate investment in Pakistani firms, with market competition considered as a moderating factor. Utilizing a panel regression model with fixed effects, we analyze data from 5,124 firm-year observations. The results reveal a significant positive relationship between T&D expenditures and corporate investment, with coefficients of 0.052 and 0.057 across the two regression models, indicating that a 1% increase in T&D costs leads to a 0.052% and 0.057% increase in corporate investment, respectively. Furthermore, the interaction term between T&D costs and the Sales-based Herfindahl-Hirschman Index (SHHI) is significant and positive (0.031), suggesting that the beneficial effects of T&D on investment are amplified in highly competitive markets. Our findings align with the human capital theory and resource-based view, which emphasize the strategic importance of investing in employee skills and knowledge. Control variables such as return on assets (ROA), leverage (LEVERG), and Tobin’s Q (TOBQ) also demonstrate significant relationships with corporate investment, consistent with existing literature. This study contributes to the literature by providing empirical evidence from a developing country context, highlighting the role of market competition in enhancing the positive effects of human capital investment on corporate growth, and validating key theoretical perspectives in the Pakistani corporate sector.