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OSHA Sanctions and the Value of the Firm
Author(s) -
Fry Clifford L.,
Lee Insup
Publication year - 1989
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1989.tb00364.x
Subject(s) - sanctions , business , value (mathematics) , point (geometry) , citation , capital (architecture) , subject (documents) , occupational safety and health , actuarial science , accounting , law , political science , geometry , mathematics , archaeology , machine learning , library science , computer science , history
Citations by the Occupational Safety and Health Administration (OSHA) against companies for violating health and safety regulations are shown in this study to induce declines in the values of the subject firms. The declines are immediate and significant responses to the announcement of the OSHA citation, following the pattern predicted for efficient markets. Because firm values fall by more than proposed fines, OSHA citations are apparently forerunners of additional and significant costs to be borne by subject firms, perhaps in the form of capital costs to remedy safety conditions or losses in related lawsuits. Our findings point toward OSHA citations as an important part of the business environment.