This experiment illustrates the fact that organizations should carefully craft their whistleblower hotline policies so as to minimize the salience of retaliation risk. For example, instead of describing explicit protections from retaliation, the organization could explicitly describe the its commitment to ethical behavior. Furthermore, organizations may wish to publicize successful instances of employee whistleblowing as a means of increasing the availability of instances in which whistleblower retaliation did not occur.

Wainberg, J. and S. Perreault. 2016. Whistleblowing in Audit Firms: Do Explicit Protections from Retaliation Activate Implicit Threats of Reprisal? Behavioral Research in Accounting 28 (1): 83-93. 

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This research study makes important contributions to the literature and has implications for management intent on designing structural mechanisms that are effective in promoting whistleblowing. First, the results suggest that whistleblowing policies and procedures, as well as related supervisor exchanges with employees, that are consistent with the dimensions of organizational justice may positively impact the likelihood that organizational accountants will report potential incidents of financial statement fraud. Second, the authors limited the sample to management accountants and internal auditors because these are the organizational accountants who are likely to have early knowledge of financial statement fraud, and minimizing the costs of financial statement fraud requires timely disclosure. Organizational accountants can effectively act as corporate fraud sentinels, and the results of this study contribute to the understanding of how accountants may be motivated to disclose fraud. Third, by framing the discussion under the rewards, anti-retaliation, and structural legislative models, the authors provide accounting researchers with a framework for guiding their thinking about whistleblowing.

Seifert, D. L., J. T. Sweeney, J. Joireman, and J. M. Thornton. 2010. The influence of organizational justice on accountant whistleblowing. Accounting, Organizations & Society 35 (7): 707-717.

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• These experimental findings suggest that employees may not bypass internal reporting outlets (such as hotlines), despite the incentive provisions enacted by the Dodd-Frank Act, which encourage employees to report information regarding violations of relevant securities laws to the SEC. This finding should be of interest to audit committees and management as it suggests that the internal hotlines developed under SOX remain a viable resource for identifying wrongful behavior within organizations.
• Rather than adding a motivation for internal reporting, a monetary incentive may replace or crowd out intrinsic motivations, such as moral or ethical motivations, and offer a different motivation for internal reporting. Thus, the introduction of a monetary incentive for internal whistleblowing may not increase employees’ likelihood of blowing the whistle internally. Therefore, audit committees and management may wish to carefully consider whether offering an internal reward will have the desired effect. It may be more prudent to dedicate resources toward actions that will strengthen intrinsic motivations for internal whistleblowing, such as emphasizing employees’ ethical obligation to report internally and highlighting the benefits to the organization when employees report internally rather than externally.

For more information on this study, please contact Alisa G. Brink. 

Brink, A. G., D. J. Lowe, and L. M. Victoravich. 2013. The effect of evidence strength and internal rewards on intentions to report fraud in the Dodd-Frank regulatory environment. Auditing: A Journal of Practice & Theory 32 (3): 87-104.

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