Institutional investors and workplace safety

Abstract This study examines how institutional investors influence workplace safety. Using data from the Occupational Safety and Health Administration, we find that firms with higher institutional ownership have significantly lower injury and illness rates, especially those with dedicated investors who are geographically proximate to their establishments and high union coverage levels. Our analysis indicates that such firms adopt employee‐friendly corporate cultures and invest in organizational capital and workplace safety. Overall, this study offers novel and robust evidence of the monitoring role of institutional investors in shaping workplace safety outcomes.