Impact of Financial Leverage on the Incidence and Severity of Product Failures: Evidence from Product Recalls
研究发现财务杠杆越高或陷入困境可能性越大的企业，产品召回概率更高、召回更频繁且更严重，表明企业财务状况对产品安全有实际影响。
We study the impact of the financial condition of firms on firms’ ability to produce safer products that result in fewer recalls. Using a variety of tests, including two quasi-natural experiments that result in exogenous negative industry cash-flow shocks, we find that firms with higher leverage or distress likelihood have a greater probability of a product recall. These firms also face more frequent and severe recalls. Further, firms with more debt due at the onset of the financial crisis experience a greater likelihood and frequency of recalls. We conclude that a firm’s financial condition has real effects that impact product safety.