Firm Financing and Workplace Safety

Jonathan B. Cohn

University of Texas at Austin

Malcolm Wardlaw

University of Texas - Dallas

February 17, 2014

This paper studies the impact of a firm's financial structure and condition on workplace safety using establishment-level injury data. We find that injury rates increase with leverage, controlling for a number of other factors (including establishment fixed effects). They also increase (decrease) in response to plausibly exogenous negative (positive) cash flow shocks, especially in more leveraged firms. We interpret these results as evidence that firms cut investment in activities that enhance workplace safety when they lack financing. This represents a previously unexplored channel through which a firm's finances can impact the well-being of its employees, an important set of non-financial stakeholders in the firm.

Number of Pages in PDF File: 66

Keywords: labor and finance, capital structure, workplace safety, cash constraints, debt overhang, unions

JEL Classification: J28, G32

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Date posted: March 21, 2012 ; Last revised: February 20, 2014

Suggested Citation

Cohn, Jonathan B. and Wardlaw, Malcolm, Firm Financing and Workplace Safety (February 17, 2014). Available at SSRN: http://ssrn.com/abstract=2023888 or http://dx.doi.org/10.2139/ssrn.2023888

Contact Information

Jonathan B. Cohn
University of Texas at Austin ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)
Malcolm Wardlaw (Contact Author)
University of Texas - Dallas ( email )
2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States
972-883-5903 (Phone)
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