Management Accounting Section Midyear Meeting

Who Gets Stitches? The Effects of Rewarding Whistleblowers and Protecting Their Identity on Subsequent Cooperation

• In Event: Control Systems (Experimental)

Abstract

Companies are strongly encouraged to implement whistleblowing programs to help detect and deter misconduct in organizations. Rewarding the whistleblower and protecting the whistleblower’s identity are two highly recommended features of whistleblowing programs. I use two experiments to examine the spillover effects of these whistleblowing program features on how willing employees are to cooperate with their co-workers, both the whistleblower and neutral co-workers who did not observe misconduct or blow the whistle. Replicating prior research, I find that, when the whistleblower’s identity is known, employees prefer to cooperate less with a whistleblower than with a neutral co-worker (the “whistleblower effect”). Expanding beyond prior research, I find that providing a reward to the whistleblower results in employees choosing to cooperate even less with the whistleblower (the “reward effect”). I also find that protecting the identity of the whistleblower removes the reward effect but does not remove the whistleblower effect. As a result, when employees do not know the identity of the whistleblower, they act as though all of their co-workers are whistleblowers and, thus, are less willing to cooperate with all of their co-workers. My results contribute to the literature on whistleblowing and highlight potential costs firms may want to consider when determining whether to reward whistleblowers and protect their identities.

Author

• Ryan David Sommerfeldt, University of Illinois-Urbana-Champaign