Financing Constraints and Workplace Safety

Jonathan B. Cohn

University of Texas at Austin

Malcolm Wardlaw

University of Texas - Dallas

March 15, 2016

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

Number of Pages in PDF File: 57

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

JEL Classification: J28, G32

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Date posted: March 21, 2012 ; Last revised: May 19, 2016

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

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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