Leverage and Employee Death: Evidence from China’s Coalmining Industry

Nie, Huihua and Zhao, Huainan (2013): Leverage and Employee Death: Evidence from China’s Coalmining Industry.

Abstract

China’s coalmining fatalities were 140 times higher than the U.S. in the last decade. To shed light on this issue, we form and examinea unique panel dataset of 25,387 firm-year observations for China’s coalmining industry. We show that a firm’s leverage significantly determines its coalmining fatality: A 10% increase in the debt ratio leads, on average, to a 3% increase in the number of death tolls. It suggests that reducing leverage in coalmining firms can be an effective way to curbemployee fatalities. Our study highlightsthe importance of corporate finance in helpingsolving social and institutional problems.

• Item Type: MPRA Paper
• Language: English
• Keywords: Leverage, Debt, Capital Structure, Stakeholder Interest, Employee Death, CoalminingAccident
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J81 - Working Conditions

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