Are Secondhand Internal Whistleblowing Reports Credible?
30 Pages Posted: 8 Nov 2019
Date Written: October 29, 2019
This study examines the characteristics, credibility, and value of internal whistleblowing reports based on secondhand information. We analyze over two million reports submitted to over one thousand publicly traded U.S. firms between 2004 and 2017 and find that claims in secondhand reports are 47.7% more likely than firsthand reports to be substantiated by management, which suggests that management views many secondhand reports as credible. Further, we find negative associations between the number of secondhand reports and negative outcomes including lawsuits and government fines. These findings are consistent with secondhand reports providing valuable information that allows management to identify and address issues before they become more costly to the firm.
Keywords: whistleblowing, employee hotlines, secondhand information
JEL Classification: G34, G38, J53, J88, M54
Suggested Citation: Suggested Citation