Making Crime Pay: Timing of External Whistleblowing

Research on Professional Responsibility and Ethics in Accounting

ISBN: 978-1-78973-370-9, eISBN: 978-1-78973-369-3

ISSN: 1574-0765

Publication date: 30 September 2019

Abstract

With the increasing prevalence of awards for reporting fraudulent activity, it is important to learn if there are unintended consequences associated with the language offering such awards. Aside from issues regarding submitting unsubstantiated claims of fraud to the Securities and Exchange Commission (SEC), Section 922 of the Dodd–Frank Act may inadvertently encourage would-be whistleblowers to delay reporting fraud. Potential whistleblowers may choose to delay reporting due to the consideration of alternatives to external reporting, in a misguided attempt to increase the size of an award, or due to their ethical stance on the issues. Using a three-stage mixed methods (experiment, open-ended interviews, and experiment) approach, this study provides evidence that increased knowledge of statutes involving external whistleblowing may result in reporting delays. The data suggest that despite statements from the SEC forbidding this, managers may choose to delay reporting when under the threshold necessary to receive an award. In such a manner, managers may be allowing the fraud to grow to a necessary perceived level over time. As might be expected, the accountants in this study were more cautious, checking to see if internal reporting worked first. Of particular note, 16 individuals indicated that they would never report, with the motivation apparently driven by fear of job loss and/or retaliation. Lastly, the intention to delay or speed up reporting may be very different based on the perception of ethics involved in the decision.

Keywords

Acknowledgements

Acknowledgments

We would like to thank the faculty and visitors at Case Western Reserve University for their constructive feedback regarding this paper.

Citation

Scheetz, A.M. and Wall, J. (2019), "Making Crime Pay: Timing of External Whistleblowing", Baker, C.R. (Ed.) Research on Professional Responsibility and Ethics in Accounting (Research on Professional Responsibility and Ethics in Accounting, Vol. 22), Emerald Publishing Limited, pp. 1-30. https://doi.org/10.1108/S1574-076520190000022003

Download as .RIS

Publisher

:

Emerald Publishing Limited

Copyright © 2019 Emerald Publishing Limited

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
If you think you should have access to this content, click the button to contact our support team.