Debt, operating margin, and investment in workplace safety

We investigate how a firm's financial performance affects workplace safety. We provide empirical estimates of the relationship between a firm's financial condition and its investment in workplace safety using plant-level proxies for safety performance from OSHA records for thirteen large U.S. industries for the period 1972-87. Our results suggest that, at the lowest levels of operating margins, firms with higher operating margins have safer workplaces. Firms with more debt also have safer workplaces, but only when operating margins are relatively low. These results are consistent with a number of theoretical models in which financial factors influence operating decisions.