The Effect of Retaliation Costs on Employee Whistleblowing

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See all articles by Jonas Heese

Jonas Heese

Harvard University - Business School (HBS)

Gerardo Perez Cavazos

Harvard University - Business School (HBS)

Date Written: December 15, 2020

Abstract

We use large increases in unemployment insurance (UI) benefits to study the effects of expected retaliation costs on employee whistleblowing. Increases in UI benefits reduce the costs that arise from a job loss, one of the costliest forms of retaliation. We find that increases in UI benefits increase the number of facility-level employee workplace safety complaints filed with the regulator. Furthermore, UI benefit increases also result in more violations and more penalties. The effects are concentrated in firms where retaliation is more likely as measured by weaker employee relations, internal controls, and monitoring. Our findings show the importance of reducing retaliation costs to tap into employees’ knowledge of misconduct.

Keywords: Employee Whistleblowing, Retaliation Costs, Labor Unemployment Insurance, Workplace Safety Inspections

JEL Classification: M40, M41

Suggested Citation

Heese, Jonas and Perez Cavazos, Gerardo, The Effect of Retaliation Costs on Employee Whistleblowing (December 15, 2020). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=

Jonas Heese (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan Hall 397
Boston, MA 02163
United States

Gerardo Perez Cavazos

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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