57 Pages Posted: 21 Mar 2012 Last revised: 19 May 2016
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: Suggested Citation
Cohn, Jonathan B. and Wardlaw, Malcolm, Financing Constraints and Workplace Safety (March 15, 2016). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2023888 or http://dx.doi.org/10.2139/ssrn.2023888