Firm Financing and Workplace Safety
Jonathan B. Cohn
University of Texas at Austin
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
Date posted: March 21, 2012 ; Last revised: February 20, 2014
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