Whistleblowers and Outcomes of Financial Misrepresentation Enforcement Actions

Posted: 6 May 2018

See all articles by Andrew C. Call

Andrew C. Call

Arizona State University (ASU) - School of Accountancy

Gerald S. Martin

American University - Kogod School of Business

Nathan Y. Sharp

Texas A&M University - Department of Accounting

Jaron H. Wilde

University of Iowa - Henry B. Tippie College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2018

Abstract

Whistleblowers are ostensibly a valuable resource to regulators investigating securities violations, but whether there is a link between whistleblower involvement and the outcomes of enforcement actions is unclear. Using a data set of employee whistleblowing allegations obtained from the U.S. government and the universe of enforcement actions for financial misrepresentation, we find that whistleblower involvement is associated with higher monetary penalties for targeted firms and employees and with longer prison sentences for culpable executives. We also find that regulators more quickly begin enforcement proceedings when whistleblowers are involved. Our findings suggest that whistleblowers are a valuable source of information for regulators who investigate and prosecute financial misrepresentation.

Keywords: whistleblowers; enforcement actions; fraud; penalties; financial reporting; Securities and Exchange Commission

JEL Classification: G38; K22; K42; M40; M41; M48

Suggested Citation

Call, Andrew C. and Martin, Gerald S. and Sharp, Nathan Y. and Wilde, Jaron H., Whistleblowers and Outcomes of Financial Misrepresentation Enforcement Actions (March 1, 2018). Journal of Accounting Research, Vol. 56, No. 1, 2018. Available at SSRN: https://ssrn.com/abstract=3165572

Andrew C. Call (Contact Author)

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Gerald S. Martin

American University - Kogod School of Business ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-3914 (Phone)

Nathan Y. Sharp

Texas A&M University - Department of Accounting ( email )

4353 TAMU
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

Jaron H. Wilde

University of Iowa - Henry B. Tippie College of Business ( email )

Acquisitions
5020 Main Library
Iowa City, IA 52242-1000
United States

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