Unveiling the hidden hazards: Exploring the unintended consequences of legal changes on employee injuries

This study investigates the unintended effects of legal changes in shareholder litigation on employee injuries, revealing substantial consequences for employee welfare when restrictions are placed on shareholder litigation. Using a quasi-natural experiment involving the adoption of universal demand laws, we found that this reform, aimed at improving operational efficiency, is associated with a 28% increase in workplace injuries. This increase coincided with a marked surge in managerial focus on firm growth, without a commensurate increase in attention to safety. The association is stronger in lower income counties, highlighting a potential economic redistribution effect that concerns vulnerable employee groups. We also find that female-led firms exhibit minimal increases in injury rates after the adoption, in contrast to male-led firms, indicating that CEO gender moderates the relationship. These findings highlight how regulatory changes may be associated with unintended consequences for employees through shifts in managerial focus. We discuss the theoretical and policy implications of our findings. (PsycInfo Database Record (c) 2026 APA, all rights reserved).