Foreign Institutional Investors and Workplace Safety: A Stakeholder Stewardship Perspective

Workplace accidents remain a pervasive yet unevenly governed ethical problem, especially where labor protections are weak and enforcement is inconsistent. We examine whether, and under what conditions, foreign institutional investors (FIIs) act as stakeholder stewards who help protect workers’ safety. Building on instrumental stakeholder theory, we argue that FIIs face distinctive monitoring incentives arising from global reputational spillovers, home-country ESG mandates, and structural independence from local business networks, which together can strengthen board oversight and operational risk management. Using a longitudinal dataset of 1,020 listed firms across 49 countries from 2004 to 2016, we find that higher FII ownership is associated with fewer reported workplace accidents. This association is stronger when foreign ownership is more concentrated—enabling FIIs to overcome collective-action constraints—and when host-country employee protections are weaker, consistent with a substitution logic in which private monitoring partially fills institutional voids. The results are robust across alternative specifications, reweighting, timing and falsification tests, and an instrumental-variables specification. Our findings contribute to business-ethics, governance, and comparative-institutional research by reframing FIIs as potential co-governors of workplace ethics.