Private Equity Buyouts and Workplace Safety

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

See all articles by Jonathan B. Cohn

Jonathan B. Cohn

University of Texas at Austin

Nicole Nestoriak

Bureau of Labor Statistics

Malcolm Wardlaw

University of Michigan, Stephen M. Ross School of Business; University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

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 Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States
972-883-5903 (Phone)

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