Whistleblower Rewards, False Reports, and Corporate Fraud

Paolo Buccirossi (), Giovanni Immordino and Giancarlo Spagnolo
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Paolo Buccirossi: LEAR

No 42, SITE Working Paper Series from Stockholm School of Economics, Stockholm Institute of Transition Economics

Abstract: It is often claimed that rewards for whistleblowers lead to fraudulent reports, but for several US programs this was not a major problem. We model the interaction between rewards for whistleblowers, sanctions against fraudulent reporting, judicial errors and standards of proof in the court case on the whistleblower's allegations and the possible follow-up for fraudulent allegations. Balancing whistleblower rewards, sanctions against fraudulent reports, and courts' standards of proof is essential for these policies to succeed. When the risk of retaliation is severe, larger rewards are needed and so are tougher sanctions against fraudulent reports. The precision of the legal system must be sufficiently high, hence these programs are not viable in weak institution environments, where protection is imperfect and court precision low, or where sanctions against false reporting are mild. Internal reporting channels may interfere with the external ones in unexpected ways.

Keywords: Whistleblowers rewards; False allegations; Judicial errors; Standard of proof; Corporate fraud (search for similar items in EconPapers)
JEL-codes: G28 K42 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017-06-20, Revised 2017-08-29
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Whistleblower rewards, false reports, and corporate fraud (2021)
Working Paper: Whistleblower Rewards, False Reports, and Corporate Fraud (2017)
Working Paper: Whistleblower Rewards, False Reports, and Corporate Fraud (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hasite:0042

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