Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161230
Authors: 
Mechtenberg, Lydia
Muehlheusser, Gerd
Roider, Andreas
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 10607
Abstract: 
Whistle-blowing by employees plays a major role in uncovering corporate fraud. Various recent laws aim at improving protection of whistle-blowers and enhancing their willingness to report. Evidence on the effectiveness of such legislation is, however, scarce. Moreover, critics have raised worries about fraudulent claims by low-productivity employees. We study these issues in a theory-guided lab experiment. Easily attainable ("belief-based") protection indeed leads to more reports, both truthful and fraudulent. Fraudulent claims dilute prosecutors' incentives to investigate, and thereby hamper deterrence. These effects are ameliorated under more stringent ("fact-based") protection.
Subjects: 
corporate fraud
corruption
whistle-blowing
business ethics
cheap-talk games
lab experiment
JEL: 
C91
D83
D73
K42
M59
Document Type: 
Working Paper

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