The Hidden Costs of Whistleblower Protection

43 Pages Posted: 5 Feb 2018 Last revised: 10 Feb 2023

Multiple version iconThere are 2 versions of this paper

Date Written: January 24, 2023

Abstract

I conduct a laboratory experiment to analyze the influence of whistleblower protection on the cooperative behavior between a manager and an employee. Before taking part in a trust game with her employee, a manager has the opportunity to embezzle money at the expense of a third party. The employee observes her decision and may trigger an investigation by blowing the whistle. The treatments vary with respect to immunity and anonymity for the whistleblower. I compare misbehavior, reporting, and the cooperative behavior across the treatments. The results suggest that whistleblower protection could deter wrongdoing, but could also have a detrimental effect on cooperation if it makes it harder for the employee to signal trustworthiness.

Keywords: corporate fraud, corruption, laboratory experiment, business ethics, whistleblowing

JEL Classification: C91, D73, K42, M51

Suggested Citation

Wallmeier, Niklas, The Hidden Costs of Whistleblower Protection (January 24, 2023). Available at SSRN: https://ssrn.com/abstract=3111844 or http://dx.doi.org/10.2139/ssrn.3111844

Niklas Wallmeier (Contact Author)

University of Hamburg ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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