Health program impact on corporate share price is overstated

cover of Tracking_the_Market_Performance_of_Companies_That.2An article from the January 2016 edition of the Journal of Occupational & Environmental Medicine (JOEM) has been gaining some attention through social media networks.  The article, Tracking the Market Performance of Companies That Integrate a Culture of Health and Safety: An Assessment of Corporate Health Achievement Award Applicants, is being interpreted as evidence that health and safety programs lead to “superior market performance”.  Yes and No, but mostly No.

US Data

There are some obvious limitations to the applicability of the research report.  The report is based on American data where health insurance continues to be part of a person’s employment package.  This skews the relationship between profitability, labour productivity and occupational health and safety (OHS).

The research paper would have benefited from some analysis of the research on Occupational Safety and Health Administration’s business case for health and safety webpage which doesn’t seem to be referenced in the research’s bibliography.

Fatalities and health data

As with many articles, fatality statistics are quoted.  This report states

“Since 1970, workplace fatalities have been reduced by more than 65% and injury and illness rates have declined by 67%, according to the Occupational Safety and Health Administration (OSHA). Worker deaths have been reduced from approximately 38 per day in 1970 to 12 per day in 2012.”

But the endnote reference leads to a general OSHA stats page which leads to Bureau of Labor Statistics sites that seem to  have been dead since October 2015.  It is important to know whether the BLS and OSHA data is based on workers compensation claims or other measurement.  Compensation-based data always underestimates the real level of injury, illness and harm in workplaces.

From referencing fatalities the authors jump to corporate wellness programs without explaining the relevance of workplace fatalities to health promotion programs.  If the deaths were caused by health or disease, the link may work, but there is no correlation between health programs and fatalities.


The researchers acknowledge that correlation of data does not equate to causation but this vital point is de-emphasised in statements like this:

“Although correlation is not the same as causation, the stock market performance of the award-winning companies versus S&P 500 results consistently suggests that companies focusing on the health and safety of their workforce can yield greater value for their investors, demonstrating competitive advantage in the marketplace.”

It is easy to understand how corporate health promoters would grab this statement with the temptation of removing the all-important first line.


Each research report includes research limitations.  This research report lists the following limitations. In support of the correlation paragraph above, the researchers reiterate the difference between causation and correlation.

“This study presents the correlation between healthy and safe workforces and market performance, but it does not imply causation.”

The researchers also state that

“We recognize that many additional factors are required for companies to out-perform others in the stock market, including efficient production, product development, quality management, marketing and sales, and customer service, among others. “

So corporate health promotion is only one element of a company’s success.

Broader research

The researchers focussed on the United States experience but could have provided more relevance and, perhaps, authority if they looked  more closely at the US business case research and research from outside the US.

Work by Australia’s Westpac bank and Professor Dennis Else early this century found,

“The research by Westpac Investment Management and Monash University Accident Research Centre found a positive link between OHS performance and financial returns. They developed a test that assessed the integration of sound OHS policies and practices in organisations. This was then applied to some 150 listed companies (based on capitalisation). An investment portfolio limited to those companies that passed the test was then compared to a benchmark portfolio of all 150 companies. The portfolio of ‘good OHS companies’ outperformed consistently over the nine-year test period, by around 50-60 basis points (bps) on average.” (page 19)

The importance of this type of approach is acknowledged in a Monash University project brief from 2001 for an OHS fund that never seems to have manifested:

Monash University Accident Research Centre researcher Professor Tore Larsson is also working with Westpac to rate companies on their management of occupational health and safety issues as the basis for a soon-to-be released OHS fund.

Professor Larsson is a representative of the Commission of Occupational Health, which has about 2000 OHS experts in 95 countries who can report on the OHS performance of many companies on the Australian Stock Exchange.” (links added)

The Australian research occurred prior to the workplace health promotion movement and, if it had continued, would have address both health promotion and psychosocial risk impacts.  The fact that the research project disappeared is a major lost opportunity in OHS research. The latest business case research goes some way to regaining that lost ground.

The significant value of research into the correlation, and potential causal relationship, of OHS and share price performance is obvious as much in the US as it was in 2001 in Australia and, in relation particularly to corporate governance, in the United Kingdom in 2006.  Such a research project needs to as independent and broad as it can be.  It also needs to apply a broad definition of OHS that includes mental health and workplace health, and not be an analysis of any one particular promotional program.

To achieve this a closer analysis of economics and safety is required. As mentioned briefly above the Australian research into the OHS business case should be scrutinised as should the efforts of the United Kingdom’s Health and Safety Executive, which has produced case studies, and IOSH, who has focussed on narrow industry sectors and disciplines, such as engineering.

This is an enormous challenge that the US research helps but deserves an international approach and could change how OHS is managed and understood.

Kevin Jones

Categories economics, evidence, health, investment, OHS, productivity, research, safety, safety culture, United StatesTags , ,

One thought on “Health program impact on corporate share price is overstated”

  1. The age old problem of taking an article and interpreting it to mean something else to support your own drive and needs, in this case selling more corporate health. More power to blogs and articles that challenge what is distributed for mass consumption and may more people read it carefully, analyse the inforamtion and seek to discover the real detail behind the article, not just the slick presnetation.
    In today’s US climate I remain unconvinced, of such information given current trends by a lot of US companies to remove health benefits from their remuneration packages and a recent article made it clear that as annual leave is not federally regulated, most state provide that companies don’t legally have to provide annual leave although some do after 5 years service, but in many cases it is only a few days and in others it is just slight incrementeal leave increases over subsequent time,
    However at the same time you hear very little relating to fatigue issues in the US business and economy. Another example was when Bush removed federal legislation relating to ergonomics citing it as pseudo science and not having a benefit. How do health care programs deal with that one?
    By comparision Canada seems to have moved progressivley with social welfare trends akin to Australia and when you do a broad comparison, Australia certrainly seems to be well to the forefront and workers do have a lot of legislated benefits as well as multiple avenues to pursue issues.

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