This study helps to clarify the conditions under which employers are most likely to benefit economically from offering their workers an explicit financial reward for reporting internal misconduct. His cost-benefit analysis reveals that offering a financial reward is likely to be most cost-effective when the existing rate of whistleblowing within the firm is low and least-cost effective when it is high. Furthermore, employers who pay relatively low wages and/or whose workers have weak ethical incentives to report internal misconduct are likely to gain the most economic benefit from offering a reward.
Stikeleather, B. R. 2016. When do employers benefit from offering workers a financial reward for reporting internal misconduct? Accounting, Organizations and Society 52: 1 – 14.
The results of this study suggest that, while both types of incentive schemes are effective in promoting whistle-blowing behavior in the absence of close working relationships, the effectiveness of a rewarding incentive scheme is more likely to be undermined by the presence of close working relationships than a penalizing incentive scheme.
Boo, E., T. B. Ng, and P. G. Shankar. 2016. Effects of Incentive Scheme and Working Relationship on Whistle-Blowing in an Audit Setting. Auditing: A Journal of Practice and Theory 35 (4): 23 – 38.
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.
This study provides evidence that whistleblowers take report recipient individual differences (i.e., managerial likeability) into account when making reporting decisions. In addition, this is despite that fact that, eventually, the investigation and resolution will involve multiple organizational members. Further, the results highlight the benefits of managerial likeability: employees have higher reporting intentions when faced with a likeable manager than one who is unlikeable.
Secondly, this study finds that employees have higher reporting intentions when the fraud involves misappropriation of assets as opposed to fraudulent financial reporting, possibly because employees see fraudulent financial reporting as benefiting the organization as a whole, while misappropriation of assets benefits a single employee to the detriment of the organization.
Finally, the authors suggest that findings indicating that the strength of managerial procedural safeguards to not influence reporting intent could be a result of poor manipulations and need to be further investigated.
Kaplan, S. E., K. R. Pope, and J. A. Samuels. 2015. An Examination of the Effects of Managerial Procedural Safeguards, Managerial Likeability, and Type of Fraudulent Act on Intentions to Report Fraud to a Manager. Behavioral Research in Accounting 27 (2): 77-94.
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.
The authors’ results suggest that an external reporting channel may overcome an organization’s history of poor responsiveness to whistleblowing as well as decrease the reticence of less proactive individuals to report. The external anonymous channel thus achieves higher reporting intentions in instances of perceived past negative outcomes of a non-anonymous internal channel and among individuals who by personal trait are less likely to report. Although, the study does not address the likely incremental costs of an external channel, its results suggest no advantage to incurring such additional costs when employees perceive a situation with past positive outcomes.
For more information on this study, please contact Jian Zhang.
Zhang, J., K. Pany and P. M. J. Reckers. 2013. Under which conditions are whistleblowing “best practices” best? Auditing: A Journal of Practice and Theory 32(3): 171-181.
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.