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Whistleblower protection: Theory and experimental evidence

Lydia Mechtenberg, Gerd Muehlheusser and Andreas Roider ()

European Economic Review, 2020, vol. 126, issue C

Abstract: Whistleblowing by employees plays a major role in uncovering corporate fraud. Recent laws and global policy recommendations aim at facilitating whistleblower protection to enhance the willingness to report and to increase the detection and deterrence of misbehavior. We study these issues in a theory-guided laboratory experiment. As expected, protecting whistleblowers leads to more reporting of misbehavior. However, the predicted improvements in detection and deterrence do not materialize in the experiment. This is mainly driven by prosecutors being less inclined to investigate upon a report when protection is in place.

Keywords: Corporate fraud; Corruption; Whistleblowing; Business ethics; Cheap-talk games; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D83 D73 K42 M59 (search for similar items in EconPapers)
Date: 2020
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Related works:
Working Paper: Whistle-Blower Protection: Theory and Experimental Evidence (2017) Downloads
Working Paper: Whistle-Blower Protection: Theory and Experimental Evidence (2017) Downloads
Working Paper: Whistle-Blower Protection: Theory and Experimental Evidence (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:126:y:2020:i:c:s0014292120300799

DOI: 10.1016/j.euroecorev.2020.103447

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