We examine whether firm internal governance with respect to headquarter-plant monitoring affects workplace safety. We use travel time reductions due to new airline routes as exogenous shocks to the cost of monitoring, and find that workplace safety improves as a result of greater proximity between headquarter and subsidiary plants. The results are more pronounced for plants experiencing larger travel time reductions, smaller and rural plants, and smaller plants of larger firms. Further analyses reveal that greater proximity reduces the workload of previously overloaded plants. The results are consistent with headquarter improving monitoring and setting more realistic expectations of plants. Our results suggest that improvement in transportation infrastructure potentially benefits the welfare of front-line employees and has policy implications.
Dr. Alex Zhang is interested in integrating labor economics with research in accounting and finance. He is also a student of small firms. He obtained his B.A. in economics from East China Normal University, M.S. in accounting from the College of William and Mary, and Ph.D. in accounting from the University of Alberta.