The Hidden Costs of Whistleblower Protection

43 Pages Posted: 19 Jun 2023

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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 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, whistleblowing, business ethics, laboratory experiment

Suggested Citation

Wallmeier, Niklas, The Hidden Costs of Whistleblower Protection. Available at SSRN: https://ssrn.com/abstract=4484150 or http://dx.doi.org/10.2139/ssrn.4484150

Niklas Wallmeier (Contact Author)

University of Hamburg ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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