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Abstract Citations by the Occupational Safety and Health Administration (OSHA) against companies for violating health and safety regulations are shown in this study to induce declines in the values of the subject firms. The declines are immediate and significant responses to the announcement of the OSHA citation, following the pattern predicted for efficient markets. Because firm values fall by more than proposed fines, OSHA citations are apparently forerunners of additional and significant costs to be borne by subject firms, perhaps in the form of capital costs to remedy safety conditions or losses in related lawsuits. Our findings point toward OSHA citations as an important part of the business environment.
Fry et al. (Wed,) studied this question.