In view of recent studies that identified certain interest groups as potential whistleblowers, we propose an integrative conceptual framework to examine whistleblower behavior by whistleblower type. The framework, dubbed the whistleblowing triangle, is modeled on the fraud triangle and is comprised of three factors that condition the act of whistleblowing: pressure, opportunity, and rationalization. For a rich examination, we use a qualitative research framework to analyze 11 whistleblowing cases of corporate financial statement fraud in Canada that were publicly denounced between (...) 1995 and 2012. Our analysis indicates that whistleblowers are not only insiders but also outsiders [financial analysts, auditing firms, journalists, politicians, customers, and investors]. It also suggests that a dynamic relation may exist between whistleblowers. In addition, our findings show that most whistleblowers opt for external channels when they fail to receive an adequate response from management, seek media exposure, are interested in financial benefits resulting from the act of whistleblowing, or are interested in protecting their investment. Lastly, we propose categorizing whistleblowers into four conceptual types: protective, skeptical, role-prescribed, and self-interested. (shrink)

Business Ethics: A European Review, EarlyView.

The purpose of this study was to explore the motivational structures of external whistleblowers involved in the decision to blow the whistle by applying MEC theory and the laddering technique. Using both soft and hard laddering methods, data were collected from 37 Korean external whistleblowers. Results revealed that the means-end chain of external whistleblowers was the hierarchical linkage among two concrete attributes, two functional consequences, and one terminal value. The extant whistleblowing literature has either made assumptions about whistleblowers’ motivations when (...) developing models or has drawn indirect inferences from measures of other variables. Our study is the first with an explicit and empirical focus on whistleblowers’ motivations. The findings provide evidence of the motivational structures of external whistleblowers that consist of a set of complex paths linked by multi-layered motivators. This research will be helpful in designing and reviewing whistleblowing programs for organizations, regulatory agencies, and journalists. (shrink)

Incidences of organizational wrongdoing have become wide spread throughout the whole business world. The management of organizational wrongdoings is of growing concern in organizations globally, since these types of acts can be detrimental to financial well being. Wrongdoing occurs within organizational settings and organizational members commonly have knowledge of and thus the opportunity to report the wrongdoing. An employee’s decision to report individual or organizational misconduct, i.e. blow the whistle, is a complex phenomenon that is based upon organizational, situational and (...) personal factors. The purpose of this study is to examine the relationship between value orientations of individuals and choices for particular whistleblowing modes. Our results show that there are significant relationships between these variables. We contribute to the extant literature by choosing Turkey as context as most studies have been conducted in the US and Europe, and little has been reported about the actions taken by employees in non-Western cultures when they observe wrongdoing in their organizations. (shrink)

Whistleblowing refers to the disclosure by organization members of illegal, immoral, or illegitimate practices to persons or organizations that may be able to effect action. Most studies on the topic have been conducted in North American or European private sector organizations, and less attention has been paid to regions such as Turkey. In this study, we study the whistleblowing intentions and channel choices of Turkish employees in private and public sector organizations. Using data from 327 private sector and 405 public (...) sector employees, we find that public sector employees are more idealistic and less inclined to whistleblow externally and anonymously. Higher idealism among public sector employees does not moderate these effects. We find that private sector employees are more relativistic, and that they are more inclined to whistleblow through external and anonymous channels. More relativistic private sector employees are more likely to prefer external whistleblowing; however sector does not moderate the propensity to whistleblow anonymously. (shrink)

Investigations into ethical judgments generally seem fuzzy as to the relevant research domain. We first attempted to clarify the construct and determine domain parameters. This attempt required addressing difficulties associated with pinpointing relevant literature, most notably the varied nomenclature used to refer to ethical judgments (individual evaluations of actions’ ethicality). Given this variation in construct nomenclature and the difficulties it presented in identifying pertinent focal studies, we elected to focus on research that cited papers featuring prominent and often-used measures of (...) ethical judgments (primarily, but not exclusively, the Multidimensional Ethics Scale). Our review of these studies indicated a preponderance of inferences and conclusions unwarranted by empirical evidence (likely attributable at least partly to inconsistent nomenclature). Moreover, ethical judgments related consistently to few respondent characteristics or any other variables, emergent relationships may not always be especially meaningful, and much research seems inclined to repetition of already verified findings. Although we concluded that knowledge about ethical judgments seems not to have advanced appreciably after decades of investigation, we suggested a possible path forward that focuses on the content of what is actually being judged as reflected in the myriad of vignettes used in the literature to elicit judgments. (shrink)

Knowledge about ethical judgments has not advanced appreciably after decades of research. Such research, however, has rarely addressed the possible importance of the content of such judgments; that is, the material appearing in the brief vignettes or scenarios on which survey respondents base their evaluations. Indeed, this content has seemed an afterthought in most investigations. This paper closely examined the vast array of vignettes that have appeared in relevant research in an effort to reduce this proliferation to a more concise (...) set of overarching vignette themes. Six generic themes emerged from this process, labeled here as Dilemma, Classic, Conspiracy, Sophie’s Choice, Runaway Trolley, and Whistle Blowing. Each of these themes is characterized by a unique combination of four key factors that include the extent of protagonist personal benefit from relevant vignette activities and victim salience in vignette descriptions. Theme identification enabled inherent ambiguities in vignettes that threaten construct validity to come into sharp focus, provided clues regarding appropriate vignette construction, and may help to make sense of patterns of empirical findings that heretofore have seemed difficult to explain. (shrink)

The Sarbanes–Oxley Act of 2002 requires company executives to certify financial statements and internal controls as a means of reducing fraud. Many companies have operationalized this by instituting a sub-certification process and requiring lower-level managers to sign certification statements. These lower-level organizational members are often the individuals who are aware of fraud and are in the best position to provide information on the fraudulent act. However, the sub-certification process may have the effect of reducing employees’ intentions to report wrongdoing. We (...) suggest that subordinates with knowledge of a superior who committed a fraudulent act and certified that there is no fraud will feel less personal responsibility to report the act, thus, decreasing reporting intentions. Additionally, we suggest that if the fraud is discovered subsequent to the reports being filed with the Securities and Exchange Commission, employees will perceive lower management responsiveness to investigate the fraud, which will reduce intentions to report. Using an experimental approach, we manipulate two between-participant variables: the presence or absence of sub-certification by the transgressor and the timing of fraud discovery, either before or after the reports have been filed with the SEC. We find that when sub-certification is present, perceived personal responsibility and intentions to report were diminished compared to when sub-certification is absent. Timing of the discovery of the fraudulent act did not influence perceived management responsiveness or reporting intentions. Supplemental analysis shows that personal responsibility partially mediates the relationship between sub-certification and reporting intentions. Our findings suggest that audit committees and senior executives may want to carefully consider the costs and benefits of the sub-certification process. (shrink)

This study examined experimentally the effect of retaliation strength and accounting students’ level of moral reasoning, on their propensity to blow the whistle (PBW) when faced with a serious wrongdoing. Fifty-one senior accounting students enrolled in an auditing course offered by a large New Zealand university participated in the study. Participants responded to three hypothetical whistle-blowing scenarios and completed an instrument that measured moral reasoning (Welton et al., 1994, Accounting Education . International Journal (Toronto, Ont.) 3 (1), 35–50) on one (...) of two conditions – i.e., strong or weak retaliation for whistle-blowing. Consistent with the results of Arnold and Ponemon (1991, Auditing: A Journal of Practice and Theory 10 , 1–15) this study found that the strength of retaliation and participants’ moral reasoning level positively affected their PBW. Unlike results reported in Arnold and Ponemon (1991, Auditing; A Journal of Practice and Theory 10 , 1–15) a significant interaction effect of moral reasoning level and retaliation on participants’ PBW was not found. However, results showed that a participant’s gender has a significant effect on the relationship between his or her moral reasoning level and PBW. These results support the need to improve ethical awareness through accounting education and to increase protection for whistle-blowing (Miceli 2004, Journal of Management Inquiry 13 , 364–366). Furthermore, many participants found it difficult to take a stand when serious wrongdoing is discovered. Therefore, policymakers must exercise caution when placing heavy reliance on whistle-blowing, especially when whistle-blower protection processes are complex and not easily accessible, and processes to facilitate whistle-blowing may vary substantially between public and private sector organizations (Scholtens, 2003, Review of the operation of the Protected Disclosures Act 2000: Report to the Minister of State Services ). (shrink)

Whistleblowers have significantly shaped the state of contemporary society; in this context, this research sheds light on a persistently neglected research area: what are the key determinants of whistleblowing within government agencies? Taking a unique methodological approach, we combine evidence from two pieces of fieldwork, conducted using both primary and secondary data from the US and Indonesia. In Study 1, we use a large-scale survey conducted by the US Merit Systems Protection Board (MSPB). Additional tests are conducted in Study 1, (...) making comparisons between those who have and those who do not have whistleblowing experience. In Study 2, we replicate the survey conducted by the MSPB, using empirical data collected in Indonesia. We find a mixture of corroboration of previous results and unexpected findings between the two samples (US and Indonesia). The most relevant result is that perceived organizational protection has a significant positive effect on whistleblowing intention in the US sample, but a similar result was not found in the Indonesian sample. We argue that this difference is potentially due to the weakness of whistleblowing protection in Indonesia, which opens avenues for further understanding the role of societal cultures in protecting whistleblowers around the globe. (shrink)

The Sarbanes–Oxley Act of 2002 requires audit committees of public companies’ boards of directors to install an anonymous reporting channel to assist in deterring and detecting accounting fraud and control weaknesses. While it is generally accepted that the availability of such a reporting channel may reduce the reporting cost of the observer of a questionable act, there is concern that the addition of such a channel may decrease the overall effectiveness compared to a system employing only non-anonymous reporting options. The (...) rationale underlying this concern involves the would-be reporter’s likelihood of reporting, the seriousness with which the organization treats an anonymous report, and the organization’s ability to thoroughly follow-up the report. Thus, we explore the extent to which the availability of an anonymous reporting channel influences intended use of non-anonymous reporting channels. Further, in response to Sarbanes–Oxley and the environment of financial scandals that led to its passage, many firms are strengthening their internal audit departments, and providing them with greater independence from upper management’s direct control. Accordingly, our examination tests whether the intended use of the internal audit department as an internal reporting channel is greater when the internal audit department is of “high” versus “low” quality. Finally, the study investigates intended reporting behavior across three different cases (e.g., settings). Results show that the existence of an anonymous channel does reduce the likelihood of reporting to non-anonymous channels, that generally the internal audit department quality does not affect reporting to non-anonymous channels, and that case-setting affects the type of channel to be used. Implications from the study are discussed. (shrink)

This article uses a sample of 3076 employees working in the USA to examine the relationship between the frequency of unethical behavior that employees observe in their organization and their intention to whistleblow. The results confirm the expected curvilinear relationship based on the Focus Theory of Normative Conduct. This relationship is a combination of a diminishing negative relationship between the frequency of observed unethical behavior and the intention to whistleblow internally and a linear positive relationship between the frequency of observed (...) unethical behavior and the intention to whistleblow externally. The beliefs of employees about how supportive their management is when handling whistleblowing reports moderates the relationship between the frequency of unethical behavior employees observe and their intention to whistleblow. (shrink)

Putting measures in place to prevent wrongdoing in organizations is important, but detecting and correcting wrongdoing are also vital. Employees who detect wrongdoing should, therefore, be encouraged to respond in a manner that supports corrective action. This article examines the influence of the ethical culture of organizations on employee responses to observed wrongdoing. Different dimensions of ethical culture are related to different types of intended responses. The findings show that several dimensions of ethical culture were negatively related to intended inaction (...) and external whistleblowing and positively related to intended confrontation, reporting to management, and calling an ethics hotline. (shrink)

We report the results of a study that examines the association between gender and individuals’ intentions to report fraudulent financial reporting using non-anonymous and anonymous reporting channels. In our experimental study, we examine whether reporting intentions in response to discovering a fraudulent financial reporting act are associated with the participants’ gender, the perpetrator’s gender, and/or the interaction between the participants’ and perpetrator’s gender. We find that female participants’ reporting intentions for an anonymous channel are higher than for male participants; the (...) fraud perpetrator’s gender and the interaction with participants’ gender were not significantly associated with anonymous channel reporting intentions. Neither of the two factors nor the interaction between the two factors was associated with reporting intentions to a non- anonymous reporting channel. Results from an additional analysis indicate that male and female participants differ in the extent to which they judge the reduction in personal costs of an anonymous reporting channel compared to a non-anonymous reporting channel and that the reduction in personal costs mediates the relationship between participant gender and anonymous reporting intentions. (shrink)

The purpose of this paper is to examine whether anonymous reporting channels are effective in detecting fraud against companies. Fraud, which comprises predominantly asset misappropriation, represents a key operational risk and a major cost to organisations. The fraud triangle provides a framework for developing our understanding of how ARCs can increase detection of fraud. Using publicly listed company survey data collected by KPMG in Australia—where ARCs are not mandated—we find a positive association between ARCs and reported fraud. These results indicate (...) that ARCs are effective in detecting fraud. Additional analysis reveals that small firms derive the greatest benefit from adopting ARCs. We also find that independent boards do not directly influence the detection of fraud, but companies with independent boards detect more fraud because they implement ARCs. (shrink)

Abstract We use a controlled laboratory experiment design to test rational choice theory on student whistleblowing. We examine reporting costs by comparing actual reporting behavior under anonymous and non-anonymous reporting channels. Reporting benefits are explored by considering the influence on reporting of group versus individual reward systems. We find that the type of reporting channel does not significantly influence student reporting behavior. Rewarding students based on group test scores results in significantly higher reporting rates compared to a system rewarding students (...) based on individual test scores. Our laboratory research design allows for the measurement of actual reporting. The high reporting rates in this study emphasize the importance of clearly stating what is considered to be unethical behavior and directly asking students about their ethical environment. Content Type Journal Article Pages 1-14 DOI 10.1007/s10805-012-9154-7 Authors Iris Jenkel, St. Norbert College, De Pere, WI, USA Jason J. Haen, St. Norbert College, De Pere, WI, USA Journal Journal of Academic Ethics Online ISSN 1572-8544 Print ISSN 1570-1727. (shrink)

In the United States, the IRS now requires charities to publicly disclose any significant asset diversion, which is the theft or unauthorized use of assets, that the charity identifies during the year. We use this new disclosure to investigate whether strong governance reduces the likelihood of a charitable asset diversion. Specifically, for a sample of 1528 charities from 2008 to 2012, we simultaneously examine eleven measures of governance that capture four broad governance constructs: board monitoring, independence of key individuals, tone (...) at the top, and capital provider oversight. We find consistent evidence that good governance across all four constructs is negatively associated with the probability of an asset diversion. Of the eleven governance measures, our results indicate that monitoring by debt holders and government grantors, audits, and keeping managerial duties in-house are most strongly associated with lower incidence of fraud. Our results also indicate that the likelihood of a fraud is negatively associated with a board review of the Form 990, the existence of a conflict of interest policy, and the presence of restricted donations. In addition, we document that the likelihood of an asset diversion is negatively associated with program efficiency and positively associated with growth and organizational complexity. (shrink)

It has been suggested that a reporting channel administered by a third-party may represent a stronger procedural safeguard of anonymity and avoids the appearance of impropriety. This study examines whistleblowing intentions among lower-tier employees, specifically examines whether an externally-administered reporting channel increases whistleblowing intentions compared to an internally-administered one. In contrast to the findings of an earlier study by Kaplan et al. :273–288, 2009), our results suggest that whistle-blowing intentions are higher when the reporting channel is administered externally than when (...) it is administered internally. We also find that an externally-administered reporting channel mitigates the negative effect of bystanders on whistleblowing intentions. Implications are discussed. (shrink)

Given the importance of the Machiavellianism construct on informing a wide range of ethics research, we focus on gaining a better understanding of Machiavellianism within the whistle-blower context. In this regard, we examine the effect of Machiavellianism on whistle-blowing, focusing on the underlying mechanisms through which Machiavellianism affects whistle-blowing. Further, because individuals who are higher in Machiavellianism (high Machs) are expected to be less likely to report wrongdoing, we examine the ability of an organization’s ethical environment to increase whistle-blowing intentions (...) of high Machs. Results from a sample of 116 MBA students support our premise that Machiavellianism is negatively related to whistle-blowing. Further, we find that Machiavellianism has an indirect effect on whistle-blowing through perceived benefits and perceived responsibility. Finally, we find that a strong ethical environment, relative to a weak ethical environment, increases whistle-blowing intentions incrementally more for individuals who are higher in Machiavellianism. Taken together, these findings extend our understanding of how Machiavellianism and an organization’s ethical environment impact whistle-blowing. (shrink)

Whistleblowing is a controversial yet socially significant topic of interest due to its impact on employees, organizations, and society at large. The purpose of this paper is to integrate knowledge of whistleblowing with theoretical advancements in the broader domain of business ethics to propose a novel approach to research and practice engaged in this complex phenomenon. The paper offers a conceptual framework, i.e., the wheel of whistleblowing, that is developed to portray the different features of whistleblowing by applying the whistleblower’s (...) perspective. The framework is based on five “W” questions: Who, What, hoW, Why, and to Whom? The answers to the proposed questions clarify the main aspects of whistleblowing, provide insights into existing studies of the subject, and identify relevant gaps in the literature which, in turn, offer opportunities for future research. (shrink)

Studies on the ethical culture of organizations have mainly focused on ethical culture at the organizational level. This study explores ethical culture at the team level because this can add a more detailed understanding of the ethics of an organization, which is necessary for more customized and effective management interventions. To find out whether various teams within an organization can have different ethical cultures, we employ the differentiation perspective and conduct a survey of 180 teams from one organization. The results (...) show that there are significant differences between the ethical cultures of teams. These differences are relevant given the different relationships that were established between high and low clusters of team ethical culture and two outcome variables. The results also show that the dimensions of ethical cultures among teams have different patterns, which indicates the usefulness of using a multidimensional scale for capturing further differences among team ethical cultures. (shrink)

Studies on the ethical culture of organizations have mainly focused on ethical culture at the organizational level. This study explores ethical culture at the team level because this can add a more detailed understanding of the ethics of an organization, which is necessary for more customized and effective management interventions. To find out whether various teams within an organization can have different ethical cultures, we employ the differentiation perspective and conduct a survey of 180 teams from one organization. The results (...) show that there are significant differences between the ethical cultures of teams. These differences are relevant given the different relationships that were established between high and low clusters of team ethical culture and two outcome variables. The results also show that the dimensions of ethical cultures among teams have different patterns, which indicates the usefulness of using a multidimensional scale for capturing further differences among team ethical cultures. (shrink)

We conduct an experiment to investigate the joint effects of advisor reassurance and advice source in enhancing the impact of advice on auditors’ whistleblowing propensity. Participants from a Big 4 firm assess the likelihood that a questionable act involving a superior will be reported, both before and after receiving advice. We manipulate, between-participants, the advice source and advisor reassurance on the firm’s policy on whistleblower protection, holding constant the advice recommendation. Our study is underpinned by the premise that moral agents (...) may require an impetus to do the right thing in the form of advice whose effects may vary by its source and nature. Results are consistent with our hypothesis. Specifically, while auditors’ propensity to report a questionable act increases after receiving advice, the increase is significantly higher when the advice is received with reassurance on whistleblower protection than without reassurance, with the effect of reassurance being greater when the advice is from an authoritative source than from a non-authoritative source. These results underscore the importance of advice in promoting whistleblowing and demonstrate how the impact of advice is jointly determined by its source and reassurance on whistleblower protection. (shrink)