Whistleblowing bounties and informational effects

• 成果类型: Article
• 署名作者: Nan, Lin; Tang, Chao; Zhang, Gaoqing
• 署名单位: Purdue University System; Purdue University; Hong Kong University of Science & Technology; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101616
• 发表日期: 2024
• 关键词: board; COMPENSATION; penalties

摘要

We examine the impact of increasing whistleblowing bounties on whistleblowers' strategy and regulatory efficiency in detecting fraud. Our analysis shows the regulator extracts information about the incidence of fraud from whistleblowers' actions, and the quality of such information depends on the size of whistleblowing bounties. With a larger bounty, upon receiving a whistleblowing report, the quality of the regulator's information about fraud deteriorates, whereas upon observing no whistleblowing, the information quality about no fraud improves. Although the informational improvement upon no whistleblowing has not been widely discussed, we demonstrate it is a key determinant of the optimal whistleblowing program. We show, considering the informational value of whistleblowing and no whistleblowing, the regulator should set the bounty to encourage more whistleblowing when the prior belief of fraud is stronger and the insider is better informed. Our analysis generates policy and empirical implications for designing and studying whistleblowing programs. (c) 2023 Elsevier B.V. All rights reserved.