Financing Constraints and Workplace Safety

57 Pages Posted: 21 Mar 2012 Last revised: 19 May 2016

See all articles by Jonathan B. Cohn

Jonathan B. Cohn

University of Texas at Austin

Malcolm Wardlaw

University of Georgia

Date Written: March 15, 2016


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 an economically important margin on which firms respond to financing constraints.

Keywords: Financing constraints, workplace safety, capital structure, labor and finance

JEL Classification: J28, G32

Suggested Citation

Cohn, Jonathan B. and Wardlaw, Malcolm, Financing Constraints and Workplace Safety (March 15, 2016). Journal of Finance, Forthcoming, Available at SSRN: or

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 Georgia ( email )

Athens, GA 30602-6254
United States

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