Whistleblower Rewards, False Reports, and Corporate Fraud

31 Pages Posted: 11 Sep 2017

See all articles by Paolo Buccirossi

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 2017

Abstract

It is often claimed that rewards for whistleblowers lead to fraudulent reports, but for several US programs this has not been 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 a 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 external ones in unexpected ways.

Keywords: Corporate Fraud, False allegations, Judicial errors, Standard of proof, Whistleblowers rewards

JEL Classification: G38, H83, K20, K42, L41, M41

Suggested Citation

Buccirossi, Paolo and Immordino, Giovanni and Spagnolo, Giancarlo, Whistleblower Rewards, False Reports, and Corporate Fraud (August 2017). CEPR Discussion Paper No. DP12260. Available at SSRN: https://ssrn.com/abstract=3031897

Paolo Buccirossi (Contact Author)

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

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)

London
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

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