A study recently published in the Journal of Finance suggests that companies facing money problems were more likely to experience workplace injuries, which, in turn, compounded those companies’ financial struggles.
Specifically, the study examined data gathered from the Bureau of Labor Statistics’ annual Survey of Occupational Injuries and Illnesses and found a number of correlations:
• The workplace injury rate increased when the company received a negative cash flow shock.
• The workplace injury rate decreased when the company received a positive cash flow shock.
• As workplace injuries increased, company value decreased substantially.
Experts suggest that OSHA officials might use this information as they conduct investigations—using a company’s financial condition as a possible indicator of an increased likelihood of workplace injuries.
And, given how costly workplace injuries are to companies—in terms of workers’ compensation costs, safety repairs and upgrades, and fines—companies should remain vigilant about workplace safety, even in the face of a negative cash flow shock.