Whistleblowing on Fraud for Pay: Can I Trust You?

Guthrie, Cynthia P. and Eileen Z. Taylor, 2017. Journal of Forensic Accounting. Forthcoming.

35 Pages Posted: 28 Jan 2015 Last revised: 15 Dec 2016

See all articles by Cynthia P. Guthrie

Cynthia P. Guthrie

Bucknell University

Eileen Zalkin Taylor

North Carolina State University

Date Written: December 12, 2016

Abstract

The SEC whistleblower bounty program’s effectiveness in increasing external reports of illegal acts suggests that employers might increase internal whistleblowing by offering monetary awards. We propose and test a model that explores how monetary incentives affect trust, and ultimately whistleblowing intent, in both high and low retaliation threat environments. Results of a 2 (high/low retaliation threat) x 2 (money/no money) experimental survey of 295 US adults confirm that low (high) retaliation threat positively (negatively) relates to whistleblowing intent, mediated by trust. Monetary incentives moderate the relationship between retaliation threat and trust, such that when retaliation threat is low, money increases organizational trust, leading to higher whistleblowing intent. However, when retaliation threat is high, monetary incentives do not significantly influence trust. We also find that in a high retaliation threat environment with monetary incentives present, intrinsically motivated individuals report significantly lower levels of trust compared to trust levels reported by extrinsically motivated individuals. Our findings help managers understand how and when monetary incentives may be effective in increasing internal whistleblowing.

Keywords: Whistleblowing, incentives, retaliation, fraud

JEL Classification: G30, M41, M50

Suggested Citation

Guthrie, Cynthia P. and Taylor, Eileen Zalkin, Whistleblowing on Fraud for Pay: Can I Trust You? (December 12, 2016). Guthrie, Cynthia P. and Eileen Z. Taylor, 2017. Journal of Forensic Accounting. Forthcoming.. Available at SSRN: https://ssrn.com/abstract=2555712 or http://dx.doi.org/10.2139/ssrn.2555712

Cynthia P. Guthrie (Contact Author)

Bucknell University ( email )

Lewisburg, PA 17837
United States

Eileen Zalkin Taylor

North Carolina State University ( email )

Campus Box 8113
Nelson Hall
Raleigh, NC 27695-8113
United States
919-513-2476 (Phone)

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