This study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting. The strength of the influence of these corporate level strategies is contingent on the moral character of the firm. Unrelated diversification provides opportunity for financial innovation within the firm’s internal capital market, which can result in fraudulent reporting. This is more likely when the moral character of the firm is driven by (...) a conscienceless financial self-interest motive, as implied by the firm’s contempt toward the larger community (in terms of damage inflicted on the interests of people outside the firm). In contrast, related diversification, where product divisions focus on mutual sharing and monitoring of operational activities, can reduce the probability of fraudulent reporting. This is more likely when constituents within the firm view themselves as moral citizens, as implied by the firm’s benevolence toward the larger community. Hence, while unrelated diversification focuses the energies of managers within the firm on financial manipulation, related diversification focuses these energies on productive purposes. (shrink)

This study examined whether it was possible to classify Australian public sector employees as either whistleblowers or non-reporting observers using personal and situational variables. The personal variables were demography (gender, public sector tenure, organisational tenure and age), work attitudes (job satisfaction, trust in management, whistleblowing propensity) and employee behaviour (organisational citizenship behaviour). The situational variables were perceived personal victimisation, fear of reprisals and perceived wrongdoing seriousness. These variables were used as predictors in a series of binary logistic regressions. It was (...) possible to identify whistleblowers on the basis of individual initiative, whistleblowing propensity (individual and organisational), fear of reprisals, perceived wrongdoing seriousness and perceived personal victimisation. It was concluded that whistleblowers are not markedly dissimilar to non-reporting observers. Based on the two most influential variables (perceived personal victimisation and perceived wrongdoing seriousness), the average Australian public sector whistleblower is most likely to be an ordinary employee making a good faith attempt to stop what they perceived to be a serious wrongdoing that was initially identified through personal victimisation. (shrink)

Many jurisdictions have put regulatory strategies in place to provide incentives and safeguards to whistleblowers to encourage whistleblowing on corporate wrongdoings. One such strategy is the provision of a financial incentive to the whistleblower if the complaint leads to a successful regulatory enforcement action against the offending organization. We conducted an experiment using professional accountants as participants to examine whether such an incentive encourages potential whistleblowers to report an observed financial reporting fraud to a relevant external authority. We also examine (...) the effect of perceived seriousness of the wrongdoing on accountants’ intention to whistleblow. We find that a financial incentive results in a higher intention to whistleblow to a relevant external authority. We also find that perceptions of the seriousness of the wrongdoing are significantly and positively associated with accountants’ intention to whistleblow to a relevant external authority. We find a significant interaction between the provision of a financial incentive and the perceived seriousness of the wrongdoing on the intention to report the wrongdoing externally. The intention to report the financial reporting fraud externally is higher when the level of perceived seriousness is higher, regardless of the availability of a financial incentive. However, when the perceived level of seriousness is lower, the presence of financial incentive results in a higher intention to report the financial reporting fraud externally. These findings indicate that the impact of a financial incentive on the intention to whistleblow is moderated by perceptions of the seriousness of the wrongdoing. (shrink)

ABSTRACT:Despite a significant increase in whistle-blowing practices in work organizations, we know little about what differentiates whistle-blowers from those who observe a wrongdoing but chose not to report it. In this review article, we first highlight the arenas in which research on whistle-blowing has produced inconsistent results and those in which the findings have been consistent. Second, we propose that the adoption of an identity approach will help clarify the inconsistent findings and extend prior work on individual-level motives behind whistle-blowing. (...) Third, we argue that the integration of the whistle-blowing research with that on ethics programs will aid in systematically expanding our understanding of the situational antecedents of whistle-blowing. We conclude our review by discussing new theoretical and methodological arenas of research in the domain of whistle-blowing. (shrink)

Gender differences in ethical evaluations may vary across types of behaviors. This controlled experiment explores gender differences in ethical evaluations, moral judgment, moral intentions, and moral intensity evaluations by surveying a group of professional accountants to elicit their views on a common earnings management technique. We find that there are no significant differences between male and female professional accountants when they make an ethical evaluation involving earnings management by shipping product early to meet a quarterly bonus. Both male and female (...) professional accountants made a similar moral judgment that this action should not be completed and indicated similar moral intentions to report this type of behavior. Further, we find that male and female professional accountants made similar moral intensity evaluations when product is shipped early to meet a quarterly bonus. (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)

Given that women CEOs are usually more risk averse, engage less in opportunistic behavior, and provide higher quality earnings than men CEOs, we argue that firms with women CEOs are likely to face lower operational and information risk and thus enjoy cheaper external funds. Using a large sample of Chinese A-share listed firms operating from 2006 to 2012, we find consistent evidence that Chinese banks tend to impose lower loan costs on firms with women CEOs compared to firms with men (...) CEOs. This effect is more pronounced for non-state-owned enterprises than for state-owned enterprises, for firms without political connections than for firms with political connections, and during non-crisis periods. We do not find any significant effects for firms with women chairpersons, CFOs, or directors. (shrink)

The purpose of this study is to examine whether United States -style regulatory intervention to encourage whistle-blowing can be immediately effective if transplanted into another country with a distinctly different historical cultural background and institutional system. A total of 98 U.S. and 84 German accountants participated in a laboratory experiment relating to a case of financial statement fraud. The provision of anti-retaliation protection and monetary rewards for whistle-blowing were manipulated and participants were asked to assume the role of an internal (...) auditor. We hypothesize and find that the provision of anti-retaliation protection and monetary rewards encourage U.S. accountants to blow the whistle. In contrast, among German accountants, where their country features a historical fear and distrust of whistle-blowers, U.S.-style regulatory interventions are less effective. Together, our findings provide strong support for the theory of path-dependence, suggesting that whistle-blowing regulation should not be uniformly transplanted without due consideration of the unique history and culture of a country. (shrink)

Most research on corruption in educational settings has focused on a cross-national and macro-level analysis; however, to our knowledge, few papers have sought to explore individual perceptions that explain corruption in higher education. The present research aimed to disentangle students’ predictors of corrupt intention in a Spanish public university. A total of 933 undergraduate, postgraduate, and Ph.D. students filled out an online survey measuring four corruption scenarios: favoritism, bribery, fraud, and embezzlement. Path analysis revealed that justifiability, risk perception, and perceived (...) prevalence of corruption were significant factors in predicting corrupt intention. Moreover, willingness to report a corrupt act was predicted by corrupt intention, justifiability, and risk perception. Corrupt behavior is a complex phenomenon explained not only by peers’ behavior, but also by their individual justifications and perception of risk. Education is not free of corruption, and universities must address this urgent problem in order to avoid future economic, societal, and ethical problems. (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)

This study examines the influence of women on the boards of directors of National Health Service Foundation Trusts in England. FTs provide a public service where social performance is the primary objective, although financial constraints must be met. Female presence is higher for executive directors than non-executives, reflecting the high number of women employed in the sector. We find that a high female presence among executive and non-executive directorships does not result in significant differences either in financial return or service (...) quality. When gender diversity on boards is consistently high, the benefits on performance of having more women on the board may not be discernible. However, female Chairs or Chief Executives result in significant reductions in negative social outcomes, such as lower clinical negligence costs, without harming financial management. The findings of this study, carried out in a context of high female presence and where a woman frequently occupies one of the two most influential board positions, Chair and Chief Executive, have implications for gender diversity and gender targets on the boards of directors in business and other sectors. (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)