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Companies’ Use of Whistle-Blowing to Detect Fraud: An Examination of Corporate Whistle-Blowing Policies

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  • Gladys Lee
  • Neil Fargher

Abstract

In order to provide an effective whistle-blowing system, it is expected that companies would provide employees with a high level of disclosure regarding the whistle-blowing process. This study investigates variation in the extent of whistle-blowing disclosures. As a measure of whistle-blowing implementation, this study further examines the provision of a hotline channel. The results suggest that the extent of whistle-blowing disclosures is positively associated with the permissibility of anonymous reporting and organisational support for whistle-blowing, the number of external directors on the audit committee, and the existence of concentrated shareholdings. The mere existence of whistle-blowing disclosures could simply be symbolic. The findings also indicate a greater likelihood of the provision of hotlines when companies are larger in size, have a higher level of current inventory, are cross-listed in the US, and permit anonymous reporting. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Gladys Lee & Neil Fargher, 2013. "Companies’ Use of Whistle-Blowing to Detect Fraud: An Examination of Corporate Whistle-Blowing Policies," Journal of Business Ethics, Springer, vol. 114(2), pages 283-295, May.
    • Handle: RePEc:kap:jbuset:v:114:y:2013:i:2:p:283-295
    DOI: 10.1007/s10551-012-1348-9
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    3. Lin, Xiaowei & Li, Ao & Xu, Yonghao & Ding, Zijun, 2023. "Does internal whistleblowing build more socially responsible firms？," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 197-214.
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    6. Ridha Chakroun & Frédéric Teulon, 2014. "Whistleblowers in the pharmaceutical industry: tragic hero, black sheep or alter ego ?," Working Papers 2014-118, Department of Research, Ipag Business School.
    7. Elka Johansson & Peter Carey, 2016. "Detecting Fraud: The Role of the Anonymous Reporting Channel," Journal of Business Ethics, Springer, vol. 139(2), pages 391-409, December.
    8. Rafael Robina-Ramírez & M. Isabel Sánchez-Hernández & Carlos Díaz-Caro, 2021. "Hotel manager perceptions about corporate compliance in the tourism industry: an empirical regional case study in Spain," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(2), pages 627-654, June.
    9. Lee, Gladys & Xiao, Xinning, 2018. "Whistleblowing on accounting-related misconduct: A synthesis of the literature," Journal of Accounting Literature, Elsevier, vol. 41(C), pages 22-46.
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