Capital Market Frictions and Human Capital Investment: Evidence from Workplace Safety around Regulation SHO

50 Pages Posted: 6 Jun 2018 Last revised: 17 Jun 2018

See all articles by John (Jianqiu) Bai

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business

Eunju Lee

University of Massachusetts Lowell

Chi Zhang

University of Massachusetts Lowell

Date Written: June 11, 2018

Abstract

Using Regulation SHO as natural experiment, we find that work-related injury and illness rates increase significantly at treated firms relative to the control group. The effect is more pronounced for firms in more competitive industries, firms in which labor has low negotiating power with management, and those that are more financially constrained or with poor corporate governance. Further, this effect is not explained by salient firm performance characteristics and is stronger for firms whose stock returns are less sensitive to injury rates. Overall, the results shed light on how capital market frictions impact firms’ investment in workplace safety.

Keywords: Short Selling, Reg SHO, Workplace Safety

JEL Classification: J28, G14, G18

Suggested Citation

Bai, John (Jianqiu) and Lee, Eunju and Zhang, Chi, Capital Market Frictions and Human Capital Investment: Evidence from Workplace Safety around Regulation SHO (June 11, 2018). Available at SSRN: https://ssrn.com/abstract=3187686 or http://dx.doi.org/10.2139/ssrn.3187686

John (Jianqiu) Bai (Contact Author)

Northeastern University - D'Amore-McKim School of Business ( email )

Boston, MA 02115
United States

Eunju Lee

University of Massachusetts Lowell ( email )

1 University Ave
Lowell, MA 01854
United States
978-934-2520 (Phone)

Chi Zhang

University of Massachusetts Lowell ( email )

Pulichino Tong Building
Manning School of Business
Lowell, MA 01854
United States

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