Sustainability 2020, 12, 2649; doi:10.3390/su12072649 www.mdpi.com/journal/sustainability
Corporate Social Responsibility and Employee
Safety: Evidence from Korea
and EunSun Ki
Division of Business Administration, The University of Suwon, Gyeonggi 18323, Korea; email@example.com
Division of Business Administration & Accounting, Kangwon National University, Chuncheon 24341, Korea;
* Correspondence: firstname.lastname@example.org
Received: 1 March 2020; Accepted: 20 March 2020; Published: 26 March 2020
Abstract: Employees are an integral part of a company’s sustainable growth and they expect a safe
working environment. Therefore, analyzing the factors that affect employee safety is important. In
this context, we analyze the effect of corporate social responsibility investment on employee safety.
Using Korean listed company data from 2012 to 2014, we regress corporate social responsibility
scores on workplace injuries. The Ordinary Least Square (OLS) regression results show that higher
corporate social responsibility scores are associated with fewer working days lost owing to
workplace injuries. Moreover, while workplace injuries have a clear negative effect on firm value,
corporate social responsibility activity significantly reduces this negative effect. Our findings imply
that investment in corporate social responsibility can improve workplace safety and contribute to a
company’s sustainable growth.
Keywords: employee safety; corporate social responsibility; workplace injury; sustainability
The National Safety Council (NSC) reports that U.S. employers paid approximately US$55.43
billion in 2019 in employee compensation costs due to workplace injuries . The cost of workplace
injuries is greater than the total cost of treating cancer patients . Workplace injuries can erode a
firm’s profitability and undermine its ability to recruit and retain employees ; employees desire a
safe workplace, so employee safety is indispensable for a company’s sustainable growth. Workplace
safety has been extensively studied in the field of management, but its relationship with corporate
social responsibility (CSR) has not yet been explored. This study investigates whether socially
responsible firms invest more in workplace safety, resulting in fewer working days lost due to
workplace injuries. Moreover, we examine whether the negative effect of workplace injuries on firm
value is reduced by CSR activities.
We argue that CSR is associated with employee safety in two main ways. First, workplace
injuries have a negative impact on corporate reputation, reducing the effectiveness of CSR. In recent
times, CSR has become a popular means of managing corporate reputation . The literature suggests
that CSR improves relationships with stakeholders and allows a firm to build a favorable reputation
for itself, which improves the firm’s ability to recruit and retain talented employees [5–7], enhances
customer loyalty , strengthens supplier commitment , and increases investor confidence [10–
12]. Firms with a focus on CSR seek to lower workplace injury rates to reduce the potential for
damage to their corporate reputation. Second, employees are important internal stakeholders that
companies should consider in CSR activities. Employees share common interests with a firm’s
success; therefore, meeting their expectations is critical to long-term sustainable growth . Socially
responsible firms recognize the negative impact of workplace injuries on employee morale and well-
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being  and will invest accordingly in employee safety. Thus, we expect a positive relationship
between a high level of CSR and employee safety.
We explore the effect of CSR on workplace safety using firm-level injury data from the Korea
Occupational Safety and Health Agency, which operates under the aegis of the Ministry of
Employment and Labor and collects workplace injury data and produces related statistics. We begin
by examining the empirical relationship between firm-level injury data and CSR, using
environmental, social, and governance scores to measure firm-level CSR activities. The scores are
obtained from the Korea Corporate Governance Service, which provides a comprehensive measure
of the sustainability of listed companies in terms of environmental responsibility, social
responsibility, and governance.
Using Korean listed company data from 2012 to 2014 and controlling for firm characteristics and
industry-year fixed effects, we find a negative relationship between working days lost due to
workplace injuries and CSR scores. The empirical results support the hypothesis that socially
responsible companies invest more in employee safety and have fewer workplace injuries. We then
investigate the impact of CSR activities on the relationship between workplace injuries and firm
value. Workplace injuries result in significant direct and indirect costs that can reduce the value of a
firm. However, socially responsible companies negate this impact by being active in preventing and
resolving the damage caused by workplace injuries. Our empirical results show that the number of
working days lost due to workplace injuries is negatively related to firm value, but this negative
relationship is weak in companies with high CSR scores.
Our study contributes to the literature in several ways. First, we expand the research on the
determinants of employee safety to include CSR. Prior studies document that financial constraints
adversely affect employee safety [15,16], but other factors have not been addressed. Second, our study
explores the benefits of CSR from an employee perspective, rather than from a financial performance
perspective. The literature emphasizes that CSR activities lead to an improvement in firm value or
financial performance [8,10–12]; However, there is little research on how CSR activities benefit
employees. Our study fills this gap. Third, whereas most prior literature employs establishment-level
injury data , we analyze firm-level injury data, which will help us improve our understanding of
the determinants of firm-level injuries.
Neither the United States nor Korea has disclosed firm-level injury data to the public. The
Korean data used in this study is unique in that it provides information on the number of working
days lost owing to workplace injuries at the individual firm level. Because the social costs of
workplace accidents are of common interest not only in Korea, but also worldwide, policymakers in
every country are working to reduce workplace injuries. For example, U.S. employers paid US$55.43
billion in 2019 in compensation costs for injured employees . For government agencies that manage
workplace accidents, it is important to select companies with a high probability of incidents and take
precautionary measures. Our findings imply that policy makers need to consider individual firms’
CSR investments when screening for companies where workplace accidents are highly probable.
This article is structured as follows. Section 2 reviews prior studies and establishes our
hypotheses. Section 3 discusses the sample and research design, Section 4 presents the empirical
results, and Section 5 summarizes and concludes the research.
2. Background and Hypotheses Development
2.1. Literature Review
Over the past two decades, the global emphasis on CSR has steadily increased. CSR is no longer
considered to be a matter of choice; it is an integral part of corporate sustainable growth. While the
definition of CSR is inconclusive, the most widely accepted definition is provided by Aguinis ,
who defines CSR as “context-specific organizational actions and policies that take into account
stakeholders’ expectations and the triple bottom line of economic, social, and environmental
performance”. CSR is costly because it considers both internal and external stakeholders. According
to a survey of 1000 top-ranking companies in sales and public institutions, as of 2017, Korean
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companies spend an average of 0.14% of their earnings on CSR activities . The emphasis on CSR
has prompted researchers to determine the benefits to firms of investing in CSR activities. Most
studies show that CSR improves the perceptions of external stakeholders, resulting in an
improvement in financial performance. For example, customers that value the CSR activities of a firm
will have a preference for the product or service the firm provides, leading to customer satisfaction,
customer loyalty, and increased sales [8,19].
Socially responsible companies are less likely to engage in earnings management and provide
more reliable financial information [20,21]. The literature shows that investors and creditors have
more confidence in companies with high CSR scores, thus CSR provides the benefits of positive
abnormal stock returns, high institutional ownership, high credit ratings, and low capital costs [10–
12,22]. Therefore, several studies highlight that CSR is a necessary expenditure.
Product market competition can affect CSR activities. In developed countries, companies in
competitive industries engage in more CSR activities [23,24]. However, in an emerging market, by
contrast, companies in non-competitive industries engage in more CSR activities . Executive
compensation may also affect CSR activities. Monetary incentives designed to align the CEO’s and
shareholders’ interests have a negative effect on CSR, whereas non-monetary incentives have a
positive effect . Meanwhile, CEO risk taking incentives increase firm risk only in low CSR firms
and have no effect on firm risk in high CSR firms. High CSR firms attempt to balance the interests of
investing and non-investing stakeholders, so CEO risk taking incentives have no effect on firm risk
. Recent research on CSR show that corporate visibility in print media has a positive significant
relationship with CSR ratings [28,29].
Research on the relationship between CSR and its effect on employees is rare but has increased
in recent years. Ramus and Steger  argue that employees are more actively involved in CSR
activities if they have a positive attitude toward their firm’s CSR strategy. CSR also improves a firm’s
ability to attract and retain talent. Job seekers lack information about the company to which they
apply and infer companies with high CSR rankings as being fair and reputable [5,6]. In addition,
employees of companies that participate actively in CSR have high levels of job satisfaction and
organizational identification, resulting in a low turnover of personnel [7,31–34]. While prior research
focuses on the impact of CSR on employee satisfaction or organizational identification, this study
investigates the practical benefits employees can obtain from CSR activities, such as a safer working
2.2. Hypotheses Development
2.2.1. CSR and Employee Safety
Socially responsible firms are incentivized to behave honestly, reliably, and ethically because
such behaviors provide benefits . The literature shows that a positive reputation gained through
CSR contributes to increasing sales, attracting talent, and raising firm value [5–12]. In contrast,
frequent workplace injuries can damage a firm’s reputation. If a company receives negative media
attention due to a workplace injury, it loses public trust, which can lead to customer churn, a decline
in stock prices, increased capital costs, and a lower credit rating . A key purpose of CSR is to build
a favorable reputation by improving relationships with stakeholders; therefore, socially responsible
firms will seek to reduce the number of workplace injuries.
Employees are important company stakeholders, and firms must work to understand and meet
their expectations. ISO 26000, which provides guidance on corporate social responsibility,
emphasizes that employees share a common interest with the company’s purpose and its success ,
so meeting employees’ expectations is important for long-term corporate growth. A safe workplace
is important to employees; workplace accidents threaten mental and physical health, and socially
responsible companies will, therefore, invest more in workplace safety to meet employee
expectations of a safe work environment.
Workplace accidents can threaten the safety of the local community in which the workplace is
located and can cause serious environmental problems . The local community is an important
Sustainability 2020, 12, 2649 4 of 14
stakeholder for companies to consider when engaging in CSR . Therefore, companies that want
to maintain a close relationship with the local community will make an active effort to prevent
Based on this reasoning, we expect a negative relationship between CSR performance and
workplace injuries; that is, a positive relationship between CSR performance and employee safety.
To examine the impact of CSR performance on workplace injuries, we set the first hypothesis as
Hypothesis 1. CSR is negatively associated with workplace injuries.
2.2.2. Employee Safety and Firm Value, and CSR
Frequent workplace injuries have a negative impact on the value of a firm due to the resulting
direct and indirect costs. Direct costs include medical costs, compensation claim costs for injured
employees, and damage to business property. Indirect costs include those arising from production
downtime, lower productivity, lower employee morale, damage to the corporate reputation, and
difficulty in attracting talented employees. Cohn and Wardlaw  find a negative relationship
between firm value and workplace injury rates. They show that firm value decreases by 6.1% when
the injury rate increases by one standard deviation.
The negative impact workplace injuries on firm value may be weakened if companies are active
in injury prevention and resolve issues caused by workplace injuries by engaging with employees
and the local community. To examine the effect of CSR on the relationship between workplace
injuries and firm value, we set the second hypothesis as follows:
Hypothesis 2. CSR performance weakens the negative relationship between workplace injuries
and firm value.
3. Methodology and Data
Our first hypothesis examines whether CSR is a determinant of the rate of workplace injuries.
To test this argument, we set the following Ordinary Least Square (OLS) regression model. Table 1
presents the definitions of the variables used in Equation (1).
Ln(WDL)it + 1 = α0 + α1CSRit + α2SIZEit + α3AGEit + α4MCHit + α5CFOit + α6ROAit + α7LEVit +
α8GROWit + α9WBit + α10Ln(EMP)it + Industry fixed effect + Year fixed effect + ε (1)
Table 1. Variable definition in Equation (1)
Ln(WDL) = the log of working days lost due to workplace injuries in year t + 1
CSR = the firm’s CSR performance in year t
SIZE = the log of the firm’s total assets in year t
AGE = the firm’s age in year t
MCH = the value of the firm’s machinery divided by depreciable tangible assets in year t
CFO = the operating cash flow of the firm divided by total assets in year t
ROA = the firm’s return on assets (net income/total assets) in year t
LEV = the firm’s leverage ratio (total liabilities/total assets) in year t
GROW = the firm’s sales growth rate in year t
WB = the value of welfare benefits per employee of the firm in year t
Ln(EMP) = the log of the number of employees in the firm in year t
ε = error term
The dependent variable, Ln(WDL), is the number of working days lost due to workplace injuries
and reflects the severity of workplace injuries. Workplace injury rates treat both simple and death
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accidents in the same case, so the seriousness of the accidents is not reflected. On the other hand, the
number of working days lost increases with the grade of the worker’s physical disability, which has
the advantage of reflecting the severity of the accident. For example, accidents with the smallest
physical disability are calculated as 50 working days lost per case, while deaths are calculated as 7500
working days lost per case. The variable of interest in Equation (1) is CSR. If CSR reduces workplace
injuries by improving workplace safety, α1 is expected to be negative. Note that in Equation (1), the
dependent variable is the (t + 1) year value, while the explanatory variables are the t year values. This
is because we assume that current investments in workplace safety will affect the workplace injury
rate for the following year.
In accordance with Cohn and Wardlaw , we include firm size (SIZE), firm age (AGE),
machinery ratio (MCH), operating cash flows (CFO), profitability (ROA), debt ratio (LEV), and sales
growth rate (GROW) to control for the impact of firm characteristics on the rate of workplace injuries.
Cohn and Wardlaw  argue that firms with financial constraints are less likely to invest in
employee safety, resulting in a higher risk of injury. Firm size (SIZE), operating cash flows (CFO),
and profitability (ROA) are inverse proxy variables for financial constraints. The impact of firm age
(AGE) on the rate of workplace injuries is inconclusive. The risk of injury may be low because older
companies are more efficient in safety management; or conversely, older companies may have more
frequent accidents due to the deterioration of facilities. We control for machinery ratio (MCH)
because workplace injuries occur more frequently in industries related to physical assets rather than
services. We also control for sales growth rate (GROW); growing companies may lack the capacity to
invest in employee safety because of the burden of reinvestment, and this lack of investment can
increase the risk of injury. We include the number of employees, Ln(EMP), as a control variable
because a company with a large number of employees will often have a higher number of working
days lost. Finally, we include year and industry dummy variables to control for year- and industry-
specific differences in workplace injuries.
Our second hypothesis examines whether CSR is a moderating variable in the relationship
between workplace injuries and firm value. To test this argument, we set the following OLS
regression model. Table 2 presents the definitions of the variables used in Equation (2).
TQit = β0 + β1WDLDit + β2CSRit + β3WDLDit × CSRit + β4LEVit + β5CASHit + β6SIZEit +
β7TARit + β8CFOit + β9DIVit + β10ATOit + Industry fixed effect + Year fixed effect + ε (2)
Table 2. Variable definition in Equation (2)
TQ = Tobin’s Q in year t
1 if a firm’s working days lost due to workplace injuries in year t is greater than
the median of the sample, or otherwise is 0
CSR = the firm’s CSR performance in year t
LEV = the firm’s leverage ratio (total long-term liabilities/total assets) in year t
CASH = the firm’s cash level divided by total assets in year t
SIZE = the log of the firm’s total assets in year t
TAR = the firm’s tangible asset ratio (total liabilities/total assets) in year t
CFO = the firm’s operating cash flow divided by total assets in year t
DIV = the firm’s dividends divided by total assets in year t
ATO = the firm’s asset turnover ratio (sales/total assets) in year t
ε = error term
The dependent variable is Tobin’s Q, which is calculated as the sum of the market value of equity
and debt divided by total assets. In Equation (2), the variable of interest is Ln(WDL) × CSRD, which
represents the interaction between workplace injuries and CSR performance. If workplace injuries
have a negative impact on firm value but this relationship is weaker in firms with a good CSR
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performance, we expect β1 to be negative and β2 to be positive. We also include firm-specific controls
that affect firm value, in line with Cohn and Wardlaw .
Our sample consists of non-financial companies listed on the Korea Stock Exchange for the 2012
to 2014 period. All companies in the sample have three key characteristics: they have workplace
injury data and CSR scores, their financial data is available on TS2000, and their fiscal year ends in
Financial firms are excluded due to their low comparability with other sectors. Our data on firm-
level workplace injury is obtained from the Korea Occupational Safety and Health Agency, which is
commissioned by the Ministry of Employment and Labor to collect workplace injury data and
produce related statistics. Workplace injury data is only available for the 2012 to 2014 period;
therefore, our study is limited to that period. CSR performance is measured by environmental, social,
and governance scores provided by the Korea Corporate Governance Service. Since 2011, the Korea
Corporate Governance Service has evaluated the level of sustainability management of Korean listed
companies in the key CSR aspects of environmentally responsible management, social responsibility,
and corporate governance. We also require the availability of financial data from TS2000. TS2000 is a
business information service system that provides financial information in business reports and audit
reports submitted online by Korean listed companies. To reduce distortion in the sample due to
outliers, we winsorize all continuous variables at the top and bottom percentile. Based on these
criteria, our final sample consist of 1234 firm-year observations. Table 3 shows the sample
distribution by year. A similar distribution is shown for each year, ranging from 409 in 2012 to 417 in
Table 3. Sample Distribution by Year.
Year. Frequency %
2012 409 33.14
2013 408 33.06
2014 417 33.79
Total 1234 100.00
Table 4 presents the sample distribution by industry. The manufacturing industry represents the
highest proportion of the sample at 72.93%, followed by wholesale and retail trade (8.18%) and
professional, scientific, and technical activities (5.83%).
Table 4 Sample Distribution by Industry
Industry 1 Frequency %
Mining and quarrying 3 0.24
Manufacturing 900 72.93
Electricity, gas, steam and air conditioning supply 23 1.86
Construction 68 5.51
Wholesale and retail trade 101 8.18
Transportation and storage 24 1.94
Information and communication 34 2.76
Professional, scientific and technical activities 72 5.83
Business facilities management and business support services; rental
and leasing activities 6 0.49
Education 3 0.24
Total 1234 100.0
1 We use a one-digit SIC code for industry classification.
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4. Empirical Results
4.1. Descriptive Statistics
Table 5 presents the descriptive statistics for the sample. The average Ln(WDL) value is 3.9809,
indicating that the average firm loses 53.6 working days per year due to workplace injuries. The mean
and standard deviation for Ln(WDL) are 3.9809 and 3.7539, respectively, which implies that the
severity of workplace injuries varies across the sample. The average CSR score is 5.7464, while the
minimum and maximum values are 5.0626 and 6.5103, respectively. The average Tobin’s Q is 0.5456,
which means the market value of the total assets in our sample is 0.5456 times the book value, on
average. The average Ln(Assets) value is 26.8480, indicating that the average firm has total assets of
KRW57 billion. The companies in our sample have an average age of 40 years since their
establishment. The average firm reports 1.01% of its total assets as earnings (ROA), and its average
debt ratio (LEV) is 45.48%. On average, operating cash flow (CFO) and tangible assets (TAR) account
for 4.94% and 31.22% of total assets, respectively. The average Ln(EMP) value is 6.6128, indicating
that the average firm has 745 employees.
Table 5. Descriptive statistics (N = 1234).
Variables 1 Mean Standard Deviation Minimum Maximum
Ln(WDL)t + 1 3.9809 3.7539 0.0000 11.2975
CSRt 5.7464 0.3082 5.0626 6.5103
TQt 0.5456 0.1844 0.1275 0.9114
SIZEt 26.8480 1.5343 23.8807 31.4403
AGEt 40.0810 16.9995 4.0000 85.0000
MCHt 0.3359 0.2487 0.0000 0.8364
ROAt 0.0101 0.0730 −0.3612 0.1564
CFOt 0.0494 0.0889 −0.3046 0.3868
LEVt 0.4548 0.1854 0.0886 0.9225
WFt 0.1065 0.0594 0.0000 0.2965
Ln(EMP)t 6.6128 1.6712 3.3322 11.6634
CASHt 0.0000 0.0001 9.79e − 08 0.0003
TARt 0.3122 0.1774 0.0018 0.7168
DIVt 0.0062 −0.0078 0.0000 0.0430
ATOt 0.9479 0.4896 0.1006 2.8590
1 Refer to Table 1; Table 2 for the definitions of variables.
Table 6 presents the Pearson correlations among the variables used in Equation (1). When the
other variables are not controlled, the rate of workplace injuries is positively related to CSR
performance in the previous year. These results are inconsistent with our expectations. In addition,
the correlations indicate that the severity of workplace injuries is higher for companies with large
total assets (SIZE), many employees (Ln(EMP)), old age (AGE), a high machinery ratio (MCH), and
a high debt ratio (LEV). Meanwhile, CSR performance is positively related to firm size (SIZE), the
number of employees (Ln(EMP)), machinery ratio (MCH), profitability (ROA), debt ratio (LEV), and
welfare benefits per employee (WF).
Table 6. Pearson correlations of the variables used in Equation (1).
Variables Ln(WDL) CSR SIZE AGE MCH ROA LEV WF
CSR 0.39 ***
SIZE 0.51 ***
AGE 0.07 ** 0.03 0.08 **
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(0.02) (0.30) (0.01)
MCH 0.19 ***
LEV 0.21 ***
Refer to Table 1 for the definitions of variables. P values are in parentheses. *, **, and *** represent statistical
significance at the 10%, 5%, and 1% level, respectively.
Table 7 presents the Pearson correlations among the variables used in Equation (2). Tobin’s Q is
negatively related to working days lost due to workplace injuries, consistent with prior studies .
Moreover, Tobin’s Q is negatively related with CSR, firm size (SIZE), debt ratio (LEV), tangible asset
ratio (TAR), and asset turnover ratio (ATO), while it is positively related with cash holdings (CASH),
operating cash flows (CFO), and dividend ratio (DIV).
Table 7. Pearson correlations of the variables used in Equation (2).
s TQ Ln
(WED) CSR CASH LEV SIZE TAR CFO DIV
CSR −0.11 ***
CASH 0.17 ***
LEV −0.50 ***
SIZE −0.15 ***
TAR −0.07 **
CFO 0.28 ***
DIV 0.39 ***
ATO −0.17 ***
Refer to Table 2 for the definitions of variables. P values are in parentheses. *, **, and *** represent statistical
significance at the 10%, 5%, and 1% level, respectively.
We check for the variance inflation factor (VIF) in all regression models. The VIFs are between
1.06 and 4.74, indicating that multicollinearity is not a serious concern.
4.2. Regression Results
Table 8 shows the regression results for Equation (1). The dependent variable is the natural log
of year (t + 1) working days lost owing to injuries. The coefficient on CSR is −1.581 and is statistically
significant at the 1% level. This means that CSR investments in a given year result in a reduction in
working days lost owing to injuries in the next year. Because socially responsible firms recognize the
negative effect of workplace injuries on employee morale and well-being , they will invest more
in employee safety. In turn, active employee safety investments by CSR firms will reduce working
days lost in the following year. The negative relationship between workplace injuries in a given year
and CSR performance in the prior year supports these arguments.
The regression results for the other control variables are as follows. Working days lost owing to
injuries are positively related to both SIZE and Ln(EMP). Workplace accidents occur more frequently
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at larger companies than smaller ones. As a result, larger companies have more working days lost
owing to injuries. However, this result is inconsistent with Cohn and Wardlaw . They document
a negative relationship between injury rates and firm size. Whereas they use establishment-level
injury rates as a dependent variable, we use firm-level working days lost owing to injuries. Because
of these differences in research design, our findings may be greatly influenced by firm size. We
replicate Table 8 using working days lost owing to injuries per employee [ = working days lost owing
to injuries/the number of employees] as a dependent variable to more accurately control the effect of
firm size on our results (See Tables 10 and 11). However, our findings do not change qualitatively.
Meanwhile, the coefficient of MCH is positive and statistically significant at the 1% level. This
indicates that workplace injuries are more relevant to industries that manufacture products using
machinery than to service industries. This result is line with Cohn and Wardlaw . The coefficient
of LEV is also significantly positive at the 10% level and implies that companies with high debt ratios
are financially constrained, so they invest less in employee safety, resulting in higher injury rates .
This result is also consistent with Cohn and Wardlaw . Lastly, the coefficient on WB is
significantly negative at the 1% level. This is in line with our predictions, implying that companies
with low employee welfare spending are at greater risk for workplace accidents. Adj. R2, which
indicates the model’s explanatory power, is relatively high at 44.0%.
Table 8. The relationship between corporate social responsibility (CSR) and workplace injuries.
Variables 1 Coefficients t-value
CSR −1.581 *** −3.629
SIZE 0.313 *** 2.756
AGE 0.007 1.486
MCH 2.890 *** 7.419
ROA −0.644 −0.523
LEV 0.861 * 1.739
WF −4.783 *** −3.387
Ln(EMP) 1.295 *** 12.948
Intercept −7.022 ** −2.286
Industry dummies Included
Year dummies Included
Adj. R2 0.440
F-value 49.483 ***
1 Refer to Table 1 for the definitions of variables. t-values are in parentheses. *, **, and *** represent
statistical significance at the 10%, 5%, and 1% level, respectively.
Table 9 shows the regression results for Equation (2). Model 1 includes only a workplace injury
variable (Ln(WDL)), while Model 2 considers the interaction of workplace injuries and CSR
performance (Ln(WDL) × CSRD). In Model 1, the coefficient of Ln(WDL) is significantly negative at
the 1% level, indicating that workplace injuries have a negative impact on firm value. This result is
consistent with Cohn and Wardlaw . They argue that workplace accidents cause substantial direct
and indirect costs, thus lowering firm value . Firms bear not only direct costs, such as workers’
compensation claim costs, but also indirect costs, such as low productivity and damage to corporate
reputation. These injury-related costs increase the company’s cash outflow, which negatively affects
In Model 2, the coefficient of Ln(WDL) is significantly negative, whereas the coefficient of
Ln(WDL) × CSRD is significantly positive. These results suggest that a company with many working
days lost due to workplace injuries has a low firm value, but this relationship is mitigated for
companies with a positive CSR performance. These empirical results support Hypothesis 2. Firm
value decreases with workplace injuries ; however, the negative impact of workplace injuries on
firm value is weakened for companies with a good CSR performance. Because CSR firms consider
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employees as important stakeholders , they will be more proactive in dealing with compensation
for and recovery of employees’ damages from workplace disasters. They will also be more committed
to preventing incidents. Thus, the negative effect of workplace injuries on the firm’s future cash flows
will be smaller in companies with a good CSR performance. Our results support these arguments.
The results for the other control variables are consistent with previous studies . Debt ratio
(L EV) is n egatively relate d to fir m value . High d ebt rat ios hav e a negative eff ect on f irm val ue beca use
they increase the likelihood of bankruptcy. The coefficients on SIZE, CASH, CFO, and DIV are
significantly positive. These results are also in line with Cohn and Wardlaw . They argue that a
firm’s size, cash holdings, operating cash flows, and a propensity to pay dividends are inverse proxies
for how financially constrained the firm is. The positive coefficients of these variables suggest that a
financially sound firm has a high firm value. The Adj. R2 of the model is relatively high at 50.0%.
Table 9. The effect of CSR on the relationship between workplace injuries and firm value.
Variables 1 Model 1 Model 2
Coefficients t-value Coefficients t-value
Ln(WDL) −0.034 *** −3.97 −0.352 ** −2.22
CSRD −0.042 −1.59
Ln(WDL) × CSRD 0.056 ** 2.01
LEV −0.878 *** −19.82 −0.879 *** −19.68
CASH 348.148 *** 4.79 343.867 *** 4.74
SIZE 0.009 *** 3.40 0.010 ** 2.28
TAR −0.044 * −1.69 −0.037 −1.42
CFO 0.496 *** 6.64 0.501 *** 6.70
DIV 5.788 *** 10.70 5.769 *** 10.52
ATO −0.126 *** −15.25 −0.124 *** −14.85
Intercept 0.428 *** 4.60 0.661 *** 4.31
Industry dummies Included Included
Year dummies Included Included
N 1234 1234
Adj. R2 0.507 0.509
F-value 93.43 *** 84.01 ***
1 Refer to Table 2 for the definitions of variables. *, **, and *** represent statistical significance at the
10%, 5%, and 1% level, respectively. We correct for heteroskedasticity and autocorrelation using the
Newey–West HAC robust variance-covariance estimator.
4.3. Additional Test
In this study, we measure workplace accidents as the number of working days lost caused by
workplace injuries. This measure has the advantage of being able to reflect the severity of the
workplace injuries but has the limitation that it is difficult to accurately control the impact of the
number of employees.
In Tables 10 and 11 Table 10; Tabl e 11, we measure workplace accidents not as the total number of working
days lost, but as working days lost per employee. This measure divides the sum of working days lost
by the number of employees, which provides more precise control over the effect on the model of
employee numbers. Table 8 presents the test result of Hypothesis 1 using working days lost per
employee as a dependent variable. The coefficient of CSR is negatively significant, in line with the
results in Table 8.
Sustainability 2020, 12, 2649 11 of 14
Table 10. Test of Hypothesis 1 using an alternative measure of workplace injuries.
Variables 1 Coefficients t-value
CSR −0.186 *** (−2.631
SIZE 0.115 *** (8.242)
AGE 0.001 1.087
MCH 0.438 *** (7.031
ROA 0.194 0.966
LEV 0.298 *** 3.741
WF −0.626 *** (−2.719
Intercept −2.240 *** (−5.742
Industry dummies Included
Year dummies Included
Adj. R2 0.191
F-value 16.364 ***
1 In Table 8, the dependent variable is WDLM, which represents the working days lost due to
workplace injury per employee. Refer to Table 1 for the definitions of other variables. *, **, and ***
represent statistical significance at the 10%, 5%, and 1% level, respectively.
Table 11 presents the test result of Hypothesis 2 using working days lost due to workplace injury
per employee as the dependent variable. In Table 11, WDLDM is a dummy variable with a value of
1 if the number of working days lost due to workplace injuries per employee is greater than the
median of the sample, or a value of 0 otherwise. The coefficient of WDLDM is negatively significant,
while that of the interaction between WDLDM and CSR is positively significant, in line with the
results in Table 9.
Table 11. Test of Hypothesis 2 using an alternative measure of workplace injuries.
Variables1 Model 1 Model 2
Coefficients t-value Coefficients t-value
WDLDM −0.024 *** −2.938 −0.304 ** (−1.965)
CSR −0.037 (−1.451)
WDLDM × CSR 0.048 * (1.760)
LEV −0.880 *** −18.538 −0.879 *** (−18.548)
CASH 353.781 *** 4.640 349.665 *** (4.589)
SIZE 0.007 ** 2.501 0.009 ** (2.124)
TAR −0.046 * −1.806 −0.038 (−1.482)
CFO 0.494 *** 7.093 0.498 *** (7.163)
DIV 5.774 *** 10.828 5.778 *** (10.786)
ATO −0.128 *** −15.433 −0.125 *** (−15.074)
Intercept 0.491 *** 4.340 0.648 *** (4.142)
Industry dummies Included Included
Year dummies Included Included
Adj. R2 0.496 0.499
F-value 59.466 ***
1 In Table 9, WDLDM is a dummy variable with a value of 1 if the number of working days lost due
to workplace injury per employee is greater than the median of the sample, or a value of 0 otherwise.
Refer to Table 2 for the definitions of other variables. *, **, and *** represent statistical significance at
the 10%, 5%, and 1% level, respectively.
Overall, the results in Tables 10 and 11 Table 10; Table 11 suggest that our findings do not change
qualitatively regardless of the measure of workplace injuries.
Sustainability 2020, 12, 2649 12 of 14
In this study, we examine how a firm’s CSR activities affect employee safety. Furthermore, we
assess whether a firm’s CSR activities can mitigate the negative impact of workplace injuries on firm
value. We measure a firm’s CSR activity as the sum of its environmental, social, and corporate
governance scores issued by the Korea Corporate Governance Service. The severity of workplace
accidents is measured by the number of working days lost due to workplace injuries. We test our
hypotheses using cross-sectional regression models. Our sample comprises non-financial listed
companies in Korea from 2012 to 2014.
We find that companies with a positive CSR performance have fewer working days lost due to
workplace injuries. In firms that value CSR, an employee is an important internal stakeholder and is
essential for sustainable growth . Our findings imply that socially responsible firms invest more
in employee safety and, as a result, are less impacted by workplace injuries. We also find that the rate
of workplace injuries is negatively related to firm value, but this negative relationship weakens in
companies with good CSR performance. Socially responsible companies are active in the prevention
of workplace injuries and in recovering from incidents; therefore, investors respond less negatively
to the impact of these issues.
Employees’ safety concerns can negatively affect long-term corporate growth. This study
expands on previous research on corporate sustainability by providing empirical evidence that CSR
has the benefit of ensuring employee safety and reducing the social costs of workplace injuries.
However, despite these contributions, our study has the following limitations. First, despite the use
of a lead-lag regression model, there may still be a problem of reverse causality. Second, we assume
that the number of working days lost due to workplace injuries is inversely related to a firm’s
investment in employee safety. The reality of these assumptions can influence the interpretation of
our findings. Finally, workplace injury data are not open to the public, and we analyze injury data
only until 2014. These data constraints may affect the generalization of our findings. We expect these
problems to be addressed in future studies.
Author Contributions: Conceptualization, J.K. and E.K.; methodology, J.K.; software, J.K.; validation, E.K.;
formal analysis, J.K.; investigation, E.K.; resources, J.K.; data curation, J.K.; writing—original draft preparation,
J.K.; writing—review and editing, E.K.; visualization, E.K.; supervision, J.K.; project administration, J.K. All
authors have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Acknowledgments: We thank the two anonymous reviewers for their constructive suggestions.
Conflicts of Interest: The authors declare no conflict of interest.
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