Who Blows the Whistle on Corporate Fraud?
AbstractTo identify the most effective mechanisms for detecting corporate fraud, we study all reported fraud cases in large U.S. companies between 1996 and 2004. We find that fraud detection does not rely on standard corporate governance actors (investors, SEC, and auditors), but rather takes a village, including several nontraditional players (employees, media, and industry regulators). Differences in access to information, as well as monetary and reputational incentives, help to explain this pattern. In-depth analyses suggest that reputational incentives in general are weak, except for journalists in large cases. By contrast, monetary incentives help explain employee whistleblowing. Copyright (c) 2010 the American Finance Association.
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Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 65 (2010)
Issue (Month): 6 (December)
Other versions of this item:
- Dyck, Alexander & Morse, Adair & Zingales, Luigi, 2007. "Who Blows the Whistle on Corporate Fraud?," CEPR Discussion Papers 6126, C.E.P.R. Discussion Papers.
- Alexander Dyck & Adair Morse & Luigi Zingales, 2007. "Who Blows the Whistle on Corporate Fraud?," NBER Working Papers 12882, National Bureau of Economic Research, Inc.
- G3 - Financial Economics - - Corporate Finance and Governance
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