Workplace safety events and firm performance

Abstract

Purpose The purpose of this paper is to address a deficiency in the literature by exploring the impact of negative workplace safety announcements on firm performance. The authors analyze the issue from a corporate social responsibility perspective and explore ways supply chain managers can contribute to improve firm performance through the development of safe working environments. Design/methodology/approach Utilizing a sample of 227 negative workplace safety announcements, this paper explores the implications of negative workplace safety announcements on the stock price of a firm using event study methodology. Findings The authors find that negative workplace announcements are associated with an abnormal decrease in shareholder value. Furthermore, the authors find evidence that negative workplace safety announcements have a more pronounced negative effect on firm value in the present environment than in any previous time period. Practical implications Operations managers need to play leading roles in ensuring safe working environments. The results provide the support needed to acquire the financial resources necessary to mitigate exposure to unsafe working conditions. Originality/value This study explores the impact of negative workplace safety announcements on a firm’s stock performance. It is the first large-scale study to look at public announcements of workplace incidents and to explore the impact of such announcements in the context of time.