Blue-Collar Crime and Finance

We examine the reputational and persistent costs of blue-collar crime against firms. Blue-collar crime negatively affects firms' reputation regarding credit risk, which persists over time and worsens future access to, and the conditions of, external financing (even if firms are financially healthy again in the future, and even if current crime events are unrelated to future crime incidence). Blue-collar crime does not need to be disclosed to lenders, but revelation is more likely among firms with more employees and in smaller communities, due to potential information leakages. However, the CEO's work experience mitigates the impact of blue-collar crime on future financing conditions.