Workplace safety accident, employee treatment, and firm value: Evidence from China

Workplace safety has become a key priority in China. However, the impact of workplace safety accidents on firm value remains unexplored. In this paper, using a dataset of 249 workplace safety accidents that occurred between 2007 and 2020, we find that workplace safety accidents result in a significant average drop of 2.5% of firm value (over $80 million) within 10 trading days. Firms with superior employee treatment will suffer lower financial market penalties, confirming the insurance effect of CSR activities. The moderating effect is also present in the overall CSR as well as in the stakeholder-related CSR dimensions. In addition, firms with workplace safety accidents will experience a greater decline in employee productivity and market valuation. Overall, the above findings emphasize the important role played by workplace safety and employee treatment for firm value and can provide policy implications for government, regulators, and corporate managers in emerging markets. •We examine the impact of workplace safety accidents on firm value in China.•Workplace safety accidents result in a significant average drop of 2.5% (over $80 million) within 10 trading days.•Firms with superior employee treatment will suffer lower financial market penalties.•The moderating effect is also present in the overall CSR as well as in the stakeholder-related CSR dimensions.•Firms with workplace safety accidents will experience a greater decline in employee productivity and market valuation.