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Financing Constraints and Workplace Safety
Author(s) -
COHN JONATHAN B.,
WARDLAW MALCOLM I.
Publication year - 2016
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/jofi.12430
Subject(s) - leverage (statistics) , cash flow , workplace safety , margin (machine learning) , business , investment (military) , welfare , finance , external financing , monetary economics , economics , occupational safety and health , debt , medicine , market economy , pathology , machine learning , politics , computer science , political science , law
We present evidence that financing frictions adversely impact investment in workplace safety, with implications for worker welfare and firm value. Using several identification strategies, we find that injury rates increase with leverage and negative cash flow shocks, and decrease with positive cash flow shocks. We show that firm value decreases substantially with injury rates. Our findings suggest that investment in worker safety is an economically important margin on which firms respond to financing constraints.