A study from Danye Wang, assistant professor of accounting in the University of Iowa Tippie College of Business, finds that firms with fewer workplace injuries have to restate their earnings less often. Many also have more accurate earnings forecasts.   

She said the reason for this link is that rigorous accounting can quantify the benefits of workplace safety and show managers the full costs of those injuries, so they’re more apt to see reducing injuries as an investment. That includes the legal, reputational, and regulatory costs that go beyond medical expenses and disruption in productivity.  

She said the process of preparing rigorous financial statements also leads management teams to collect more information that helps them better understand the importance of workplace safety. Lower information quality is not normally so revealing.  

“High information quality can increase the awareness of managers and stakeholders to workplace safety and thus motivate them to improve safety,” she said. “It can show where the problems are so they can be fixed, and investments in safety-related issues bring positive returns.”