Making Crime Pay: Timing of External Whistleblowing

• In Event: Whistleblowing and Auditee Reporting Intentions

Abstract

With the increasing prevalence of awards for reporting fraudulent activity, it is
important to learn if there are unintended consequences in offering such awards. Aside from
submitting unsubstantiated claims of fraud to the SEC, Section 922 of the Dodd-Frank Act may
encourage would-be whistleblowers to delay reporting fraud. Potential whistleblowers could then become eligible for a monetary award if, by waiting, the expected monetary sanctions later exceeded $1 million, or could increase a potential monetary award. Using an experimental
approach, this study provides evidence of circumstances in which an employee chooses to delay reporting fraud.

Authors

• Andrea Scheetz, Case Western Reserve University

• Joseph Wall, Marquette University