Short-Selling Pressure and Workplace Safety: Curbing Short-Termism Through Stakeholder Interdependencies

Cuili Qian (), Donal Crilly (), Yupeng Lin (), Keyuan Zhang () and Rengong Zhang ()
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Cuili Qian: Naveen Jindal School of Business, University of Texas at Dallas, Richardson, Texas 75080
Donal Crilly: London Business School, London, United Kingdom of Great Britain and Northern Ireland NW1 4SA
Yupeng Lin: NUS Business School, National University of Singapore, Singapore 119077
Keyuan Zhang: Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200030, China
Rengong Zhang: College of Business, City University of Hong Kong, Kowloon Tong, Hong Kong

Organization Science, 2023, vol. 34, issue 1, 358-379

Abstract: We advance a multistakeholder framework that highlights the influence of stakeholders in tempering short-termist responses to capital market pressures. When firms face pressure from short sellers in the capital market, they sometimes shift attention to short-term stock performance and neglect critical investments that pay off in the long run. Relying on a quasi-natural experiment and establishment-level data on workplace injuries, we find that short-selling pressure causes an increase in employee injuries. Critically, however, the degree to which the response is short-termist depends on the salience of multiple stakeholders (analysts, shareholders, employees, and managers). We discuss the implications for understanding firms’ relations with their stakeholders and, particularly, how these stakeholders influence corporate responses to capital market pressures in ways that matter for long-term value creation. This study also contributes to strategy research by highlighting the downside of capital market deregulation.

Keywords: stakeholder interdependency; stakeholder salience; short-selling pressure; workplace safety; intertemporal perspective (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:34:y:2023:i:1:p:358-379

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