Study: Workplace Injuries More Likely When Earnings Pressure Rises

Chris Gaetano
Published Date:
May 19, 2017

A recent study has found that workplace injuries are more common when the company faces pressure to meet earnings expectations, according to a study in the Harvard Business Review. The study, recently published in the Journal of Accounting and Economics, looked at establishment-level injury data from the Occupational Safety and Health Administration from 2002 and 2011 and matched it to earnings data to produce a sample of 35,350 incidents for 868 firms. This excluded financial firms and firms in regulated industries. Controlling for other factors, injury and illness rates are 5 to 15 percent higher in periods where a firm meets or just beats analyst forecasts, significantly higher than those firms that miss or comfortably beat analyst forecasts. 

"The higher injury/illness rates in firms that meet or just beat analyst forecasts are associated with both increases in employee workloads and in abnormal reductions of discretionary expenses. The relation between benchmark beating and workplace safety is stronger when there is less union presence, when workers’ compensation premiums are less sensitive to injury claims, and among firms with less government business. Our findings highlight a specific consequence of managers’ attempts to meet earnings expectations through real activities management," said the study abstract. 

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