Unsafe and unhealthy factory working conditions are still present in developed countries at large brand-name firms and do not solely occur at upstream suppliers in third-world countries. Based on 299 factory worker incidents, we conduct an international event study to estimate the performance implications of factory worker incidents. We find that firms experience significant mean abnormal returns of -0.15\% on the incident day. We further analyze the impact of firm characteristics related to both manufacturing and organizational levels. Specifically, we find the negative abnormal returns to be strengthened when physical harm is caused to employees and the incident possibly affects supply chain partners. We further demonstrate that higher lean orientation and crisis preparedness reinforce the negative impact on shareholder value. Our results suggest that capacity slack mitigates the negative performance implications. Further posthoc analyses indicate negative spillover effects on customers and suppliers.
