Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    An Examination of the Effects of Managerial Procedural...
    research summary posted February 17, 2016 by Jennifer M Mueller-Phillips, tagged 06.0 Risk and Risk Management, Including Fraud Risk, 06.01 Fraud Risk Assessment, 14.0 Corporate Matters, 14.02 Corporate Whistle Blowers 
    An Examination of the Effects of Managerial Procedural Safeguards, Managerial Likeability, and Type of Fraudulent Act on Intentions to Report Fraud to a Manager.
    Practical Implications:

    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.

    managerial procedural safeguards, managerial likeability, fraud, reporting intentions
    Purpose of the Study:

    Because only a fraction of employees who discover fraud actually report it, the authors endeavor to obtain a better understanding of factors influencing individuals' intentions to report fraud, particularly to a non-anonymous recipient such as a manager (as opposed to an anonymous recipient, such as a hotline). The authors predict that reporting intentions to a manager will be influenced by 3 factors:

    • Attributes of the firm (i.e., strong managerial procedural safeguards will result in stronger reporting intentions than will weak managerial procedural safeguards)
    • Report recipient (i.e., a likeable manager will result in stronger reporting intentions than will an unlikeable manager)  
    • Type of fraud (i.e., managers are more likely to report misappropriation of assets than fraudulent financial reporting)

    Results indicate that managerial likeability and the type of fraud, but not managerial procedural safeguards or the interaction with managerial likeability, significantly influence reporting intentions to a manager.

    The authors contend that participants are influenced by managerial likeability because it provides specific information about the manager and acts as a signal about how the manager will likely handle a fraud report. In addition, these results suggest that participants make stronger attributions to a person engaging in misappropriation of assets compared to a person engaging in fraudulent financial reporting.

    Design/Method/ Approach:

    The authors execute a 2 x 2 x 2 between-subjects experiment, engaging 171 professional accountants and managers and randomly assigning each to one of eight experimental conditions. Participants had an average of over 26 years of work experience and almost half (47.5%) reported having had discovered a person of greater authority than themselves engaging in questionable or wrongful behavior. Participants were presented with a scenario in which an employee identifies an apparent fraudulent act by his immediate supervisor and asked about their intentions to report the fraud to a manager.

    • Attributes of the firm: Findings do not indicate that variances in managerial procedural safeguards (strong or weak) impact participant intention to report a fraud.
    • Report recipient: Findings indicate that reporting intentions were significantly higher when the manager was described as likeable (as opposed to unlikeable).
      • The authors suggest that this is because likeable managers are perceived as being more approachable, and will be expected to perform well as a recipient of a fraud report.
    • Type of fraud: Findings indicate that participants have significantly higher reporting intentions when the fraud involves a misappropriation of assets (i.e., employees taking company assets) versus when the fraud involved fraudulent financial reporting (i.e., misreporting financial results or financial position).
      • This, the authors posit, is because misappropriation of assets is seen as benefiting the employee only at the expense of the company and its shareholders, while fraudulent financial reporting might be seen as benefiting the company.
    Corporate Matters, Risk & Risk Management - Including Fraud Risk
    Corporate Whistle Blowers, Fraud Risk Assessment