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Evidence on the Use and Efficacy of Internal Whistleblowing Systems

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  • STEPHEN R. STUBBEN
  • KYLE T. WELCH

Abstract

Using a proprietary data set from a provider of internal whistleblowing (WB) systems, we analyze nearly two million internal WB reports submitted to over 1,000 publicly traded U.S. firms. We provide descriptive statistics, over time and across report types, on the amount and summary details of information provided, how extensively management reviews reports, the amount of time until reviews were completed, and the outcome of these reviews. Further, we examine the characteristics of firms with more actively used systems (i.e., a higher volume of reports, more information provided in reports, and reports that are more frequently reviewed by management). Finally, we show that internal WB report volume is associated with fewer and lower amounts of government fines and material lawsuits.

Suggested Citation

  • Stephen R. Stubben & Kyle T. Welch, 2020. "Evidence on the Use and Efficacy of Internal Whistleblowing Systems," Journal of Accounting Research, Wiley Blackwell, vol. 58(2), pages 473-518, May.
    • Handle: RePEc:bla:joares:v:58:y:2020:i:2:p:473-518
    DOI: 10.1111/1475-679X.12303
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    References listed on IDEAS

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    1. Clara Xiaoling Chen & Jennifer E. Nichol & Flora H. Zhou, 2017. "The Effect of Incentive Framing and Descriptive Norms on Internal Whistleblowing," Contemporary Accounting Research, John Wiley & Sons, vol. 34(4), pages 1757-1778, December.
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    6. Andrew C. Call & Gerald S. Martin & Nathan Y. Sharp & Jaron H. Wilde, 2018. "Whistleblowers and Outcomes of Financial Misrepresentation Enforcement Actions," Journal of Accounting Research, Wiley Blackwell, vol. 56(1), pages 123-171, March.
    7. Kim, Irene & Skinner, Douglas J., 2012. "Measuring securities litigation risk," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 290-310.
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    Cited by:

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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.
    4. Nadia Smaili & Wim Vandekerckhove & Paulina Arroyo Pardo, 2023. "Handling Whistleblowing Reports: The Complexity of the Double Agent," Journal of Business Ethics, Springer, vol. 186(2), pages 279-292, August.
    5. Clark, Daniel R. & Skousen, Bradley R., 2023. "Whistleblowing in entrepreneurial ventures," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
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    8. Eugene Soltes, 2020. "Paper Versus Practice: A Field Investigation of Integrity Hotlines," Journal of Accounting Research, Wiley Blackwell, vol. 58(2), pages 429-472, May.
    9. Philip G. Berger & Heemin Lee, 2022. "Did the Dodd–Frank Whistleblower Provision Deter Accounting Fraud?," Journal of Accounting Research, Wiley Blackwell, vol. 60(4), pages 1337-1378, September.

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