Private Equity Buyouts and Workplace Safety

Accepted, Review of Financial Studies

63 Pages Posted: 8 Feb 2016 Last revised: 30 Dec 2020

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 Georgia

Date Written: December 28, 2020

Abstract

This paper presents evidence of a large, persistent decline in establishment-level workplace injury rates after private equity (PE) buyouts of publicly traded U.S. firms. We find that firms experience fewer OSHA safety violations after buyouts and that a larger decline in injury rates is associated with an increased probability of exit via IPO. Employment reductions after buyouts are concentrated in relatively low-injury-risk establishments. Overall, our results suggest that buyouts improve workplace safety and that PE acquirers benefit from this improvement. We explore possible causes of these changes through interviews with executives of companies acquired in buyouts and through cross-sectional analysis.

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

JEL Classification: G32, G34, J28

Suggested Citation

Cohn, Jonathan B. and Nestoriak, Nicole and Wardlaw, Malcolm, Private Equity Buyouts and Workplace Safety (December 28, 2020). Accepted, Review of Financial Studies, 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 Georgia ( email )

Athens, GA 30602-6254
United States

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