Paying for Altruism: An Investigation of Deontic Justice and Financial Rewards on Taxpayers’ Whistleblowing

38 Pages Posted: 19 Jan 2019 Last revised: 1 Apr 2019

See all articles by Leslie Berger

Leslie Berger

Wilfrid Laurier University - School of Business & Economics

Jonathan Farrar

Ryerson University

Linda Thorne

York University - Schulich School of Business

Date Written: March 30, 2019

Abstract

Historically tax authorities have relied upon taxpayers’ intrinsic desire for deontic justice to motivate whistleblowing of tax fraud. Deontic justice involves holding a third party morally accountable for their unfair actions. Yet recently, tax authorities have offered financial rewards for whistleblowing likely under the assumption that financial rewards always increase taxpayers’ motivation to blow the whistle. This assumption flies in the face of motivational crowding theory. Motivational crowding theory predicts that when financial incentives reinforce intrinsic motivation they increase individuals tendency to act, but when financial rewards undermine individuals’ intrinsic motivation they decrease individuals’ tendency to act. In other words, motivational crowding theory suggests that the effect of financial rewards depends upon the interplay between intrinsic and extrinsic motivation in affecting taxpayers’ motivation to blow the whistle. Accordingly, we develop predictions integrating deontic justice theory and motivational crowding theory and test our predictions using a 2 x 2 between-subjects fully crossed experiment with 399 taxpayers. We find that moral outrage – an emotional reaction resulting from one’s desire for deontic justice – mediates taxpayers’ tendency to blow the whistle, which is conditional upon financial rewards. Financial rewards augment (diminish) higher (lower) levels of moral outrage. Thus, our findings suggest that financial rewards appear to increase taxpayers’ whistleblowing of morally significant infractions and decrease taxpayers’ whistleblowing of morally insignificant infractions. Implications for practice and theory are discussed.

Keywords: whistleblowing, deontic justice, financial rewards

JEL Classification: M40

Suggested Citation

Berger, Leslie and Farrar, Jonathan and Thorne, Linda, Paying for Altruism: An Investigation of Deontic Justice and Financial Rewards on Taxpayers’ Whistleblowing (March 30, 2019). 2019 Canadian Academic Accounting Association (CAAA) Annual Conference. Available at SSRN: https://ssrn.com/abstract=3318272 or http://dx.doi.org/10.2139/ssrn.3318272

Leslie Berger (Contact Author)

Wilfrid Laurier University - School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
CANADA

Jonathan Farrar

Ryerson University ( email )

Ryerson University, 350 Victoria Street, Toronto
Toronto, Ontario M5B 2K3
Canada

Linda Thorne

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100, x30223 (Phone)

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