Adopting Occupational Health and Safety Management Standards: The Impact on Financial Performance in Pharmaceutical Firms in China

Abstract

Background and Purpose

In recent years, the frequent occurrence of occupational accidents, illness, and injuries has become a major issue in China. This study aims to investigate the relationship between the adoption of Occupational Health and Safety Management System (OHSMS) standards and financial performance, with a particular focus on the pharmaceutical firms in China.

Methods

The study is based on a sample consisting of 125 pharmaceutical firms listed on the Shanghai and the Shenzhen stock exchanges in China for the period 2010–2018. Each sample firm was evaluated by whether and when it is certified by an OHSMS standard depending on secondary data collected from an independent certification database. Panel-based regression models were employed to explore whether adoption of an OHSMS standard has had an impact on financial performance.

Results

The regression results reveal that the adoption of an OHSMS standard positively affects contemporaneous financial performance measured by return on assets (ROA), return on equity (ROE), and earnings per share (EPS). Mixed results were found when financial performance indicators were extended by two years, suggesting that ROE will increase in the second year after a firm is certified with the standard, but EPS will decline in the third year.

Conclusion

The study findings empirically show that adoption of an OHSMS standard contributes to better financial performance for pharmaceutical firms of China in the short term. However, executives of pharmaceutical firms need to be aware of the increased costs related to certification renewal and audit in the following periods and exercise their management discretion to achieve a win–win situation between OHSMS implementation and financial benefit.

Keywords:

• occupational health and safety management system
• OHSAS 18001
• ISO 45001
• financial performance
• pharmaceutical firm

Acknowledgments

This research was funded by the internal project Excellence 2020, Faculty of Informatics and Management, University of Hradec Kralove, Czech Republic.

Abbreviations

OHS, Occupational Health and Safety; OHSMS, Occupational Health and Safety Management System; CSR, Corporate Social Responsibility; OHSAS, Occupational Health and Safety Assessment Series; ISO, International Organization for Standardization; PDCA, Plan-Do-Check-Act; CAIPSP, National Certification and Accreditation Information Public Service Platform; CNCA, Certification and Accreditation Administration of the People’s Republic of China; CSMR, China Stock Market and Accounting Research; CSRC, China Securities Regulatory Commission; ST, special treatment; ROA, return on assets; ROE, return on equity; EPS, earnings per share; VIF, variance inflation factor; CI, confidence interval.

Data Sharing Statement

The dataset analysed and used to support the findings of this study is available from the authors upon request.

Ethical Approval

This study does not require ethical approval, because we used secondary data that are freely accessible.

Disclosure

The authors report no conflicts of interest in this work.