A new study from The University of Texas at Dallas examined how financing constraints impact workplace safety and the implications for firm value and employee welfare. Using injury data from the Bureau of Labor Statistics’ annual Survey of Occupational Injuries and Illnesses, the researchers (publishing in the Journal of Finance) examined the sensitivity of workplace injury rates to a firm’s available financial resources.
The study found that:
- Injury rates increase after debt increases and increase with negative cash flow shocks.
- Injury rates decrease with positive cash flow shocks.
- Firm value decreases substantially with an increase in injury rates.
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