Financing Constraints and Workplace Safety
Jonathan B. Cohn
University of Texas at Austin
University of Texas - Dallas
November 27, 2015
Journal of Finance, Forthcoming
We present evidence that financing frictions adversely impact investment in workplace safety, with implications for worker welfare and firm value. Using several identification strategies, we find that injury rates increase with leverage and negative cash flow shocks, and decrease with positive cash flow shocks. We show that firm value decreases substantially with injury rates. Our findings suggest that investment in worker safety is another, economically important margin on which firms respond to financing constraints.
Number of Pages in PDF File: 60
Keywords: Financing constraints, workplace safety, capital structure, labor and finance
JEL Classification: J28, G32
Date posted: March 21, 2012 ; Last revised: November 30, 2015
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