A tough pill to swallow? The impact of voluntary occupational health and safety management system on firms’ financial performance in fashion and textiles industries

The purpose of this paper is to investigate the impacts of voluntary Occupational Health and Safety Management System (OHSMS) certification (i.e. OHSAS 18001) on fashion and textiles-related companies’ financial performance. From all US-listed fashion and textiles-related companies, 44 companies that obtained OHSAS 18001 certification were used as samples. A long-horizon event study was conducted to estimate the sample companies’ abnormal changes of sales and return-on-assets (ROA) over non-OHSAS 18001 adopters in the same industry. The authors found that OHSAS 18001 adoption has a positive impact on fashion and textiles-related company's sales performance. Nevertheless, the OHSAS 18001 adoption has a negative impact on the company's ROA performance. Because of the increasing fashion customers’ attention on the occupational health and safety (OHS) issues on personal goods, such as fashion, apparel and beauty products, major fashion brands and retailers often require their suppliers to implement a voluntary OHSMS, in order to avoid any OHS scandal, such as sweatshops and child labour. However, the impacts of OHSMS on fashion and textiles-related manufacturers have never been examined empirically. The paper provides the first empirical evidence of impacts of OHSAS 18001 on fashion and textiles-related companies’ financial performances.