Institutional Investors and Workplace Safety

Abstract

We examine whether institutional investors play a role in improving workplace safety. By compiling establishment-level work-related injury data from the Occupational Safety and Health Administration, we document significantly lower injury and illness rates that are more pronounced in firms with higher institutional ownership. This finding is more evident when the firms are owned by more dedicated institutional investors, who are geographically proximate to their establishments with high union coverage levels. Regarding the channel through which institutional investors influence workplace safety, further analysis suggests that firms with higher institutional ownership tend to adopt an employee-friendly corporate culture and invest in organizational capital and workplace safety. Overall, this study provides novel and robust evidence of the monitoring role of institutional investors in explaining variations in workplace safety outcomes.

Keywords: Workplace safety, total case rate (TCR), injury and illness rate, geographic proximity, social factor