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Private Equity Buyouts and Workplace Safety

63 Pages Posted: 8 Feb 2016 Last revised: 11 Sep 2017

Jonathan B. Cohn

University of Texas at Austin

Nicole Nestoriak

Bureau of Labor Statistics

Malcolm Wardlaw

University of Texas - Dallas

Date Written: September 10, 2017

Abstract

This paper presents evidence of a large, persistent decline in establishment-level workplace injury rates after private equity (PE) buyouts of publicly-traded firms but not already-private firms. Cross-sectional evidence further links the public-firm post-buyout decline to alleviation of market pressure to focus on short-term performance. Employment drops more in low-injury risk establishments, and the fall in injury rates does not correlate with reductions in employment post-buyout, suggesting that systematic outsourcing of dangerous jobs or underreporting due to layoff concerns is unlikely to explain the results. Overall, our results suggest a novel dimension on which buyouts improve firms' fundamental operational competencies.

Keywords: Private equity buyouts, workplace safety, labor and finance

JEL Classification: G32, J28

Suggested Citation

Cohn, Jonathan B. and Nestoriak, Nicole and Wardlaw, Malcolm, Private Equity Buyouts and Workplace Safety (September 10, 2017). Available at SSRN: https://ssrn.com/abstract=2728704 or http://dx.doi.org/10.2139/ssrn.2728704

Jonathan B. Cohn (Contact Author)

University of Texas at Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)

Nicole Nestoriak

Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Washington, DC 20212
United States

Malcolm Wardlaw

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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