Download this Paper Open PDF in Browser

Whistleblower Rewards, False Reports, and Corporate Fraud

Stockholm Institute of Transition Economics Working Paper No. 42

28 Pages Posted: 28 Jun 2017 Last revised: 29 Aug 2017

Paolo Buccirossi

Laboratorio di economia, antitrust, regolamentazione (LEAR)

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF)

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Multiple version iconThere are 2 versions of this paper

Date Written: August 28, 2017

Abstract

It is often claimed that rewards for whistleblowers lead to fraudulent reports, but for several US programs this was not a major problem. We model the interaction between rewards for whistleblowers, sanctions against fraudulent reporting, judicial errors and standards of proof in the court case on the whistleblower's allegations and the possible follow-up for fraudulent allegations. Balancing whistleblower rewards, sanctions against fraudulent reports, and courts' standards of proof is essential for these policies to succeed. When the risk of retaliation is severe, larger rewards are needed and so are tougher sanctions against fraudulent reports. The precision of the legal system must be sufficiently high, hence these programs are not viable in weak institution environments, where protection is imperfect and court precision low, or where sanctions against false reporting are mild. Internal reporting channels may interfere with the external ones in unexpected ways.

Keywords: Whistleblowers Rewards, False Allegations, Judicial Errors, Standard of Proof, Corporate Fraud

JEL Classification: G28, K42

Suggested Citation

Buccirossi, Paolo and Immordino, Giovanni and Spagnolo, Giancarlo, Whistleblower Rewards, False Reports, and Corporate Fraud (August 28, 2017). Stockholm Institute of Transition Economics Working Paper No. 42. Available at SSRN: https://ssrn.com/abstract=2993776

Paolo Buccirossi

Laboratorio di economia, antitrust, regolamentazione (LEAR) ( email )

Via di Monserrato 48
Rome, 00186
Italy
+39 066 830 0530 (Phone)

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF) ( email )

84084 Fisciano, Salerno
Italy

Giancarlo Spagnolo (Contact Author)

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Paper statistics

Downloads
63
Rank
303,611
Abstract Views
186