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Intentions to Report Questionable Acts: An Examination of the Influence of Anonymous Reporting Channel, Internal Audit Quality, and Setting


  • Steven Kaplan


  • Joseph Schultz


The Sarbanes–Oxley Act of 2002 requires audit committees of public companies’ boards of directors to install an anonymous reporting channel to assist in deterring and detecting accounting fraud and control weaknesses. While it is generally accepted that the availability of such a reporting channel may reduce the reporting cost of the observer of a questionable act, there is concern that the addition of such a channel may decrease the overall effectiveness compared to a system employing only non-anonymous reporting options. The rationale underlying this concern involves the would-be reporter’s likelihood of reporting, the seriousness with which the organization treats an anonymous report, and the organization’s ability to thoroughly follow-up the report. Thus, we explore the extent to which the availability of an anonymous reporting channel influences intended use of non-anonymous reporting channels. Further, in response to Sarbanes–Oxley and the environment of financial scandals that led to its passage, many firms are strengthening their internal audit departments, and providing them with greater independence from upper management’s direct control. Accordingly, our examination tests whether the intended use of the internal audit department as an internal reporting channel is greater when the internal audit department is of “highâ€\x9D versus “lowâ€\x9D quality. Finally, the study investigates intended reporting behavior across three different cases (e.g., settings). Results show that the existence of an anonymous channel does reduce the likelihood of reporting to non-anonymous channels, that generally the internal audit department quality does not affect reporting to non-anonymous channels, and that case-setting affects the type of channel to be used. Implications from the study are discussed. Copyright Springer 2007

Suggested Citation

  • Steven Kaplan & Joseph Schultz, 2007. "Intentions to Report Questionable Acts: An Examination of the Influence of Anonymous Reporting Channel, Internal Audit Quality, and Setting," Journal of Business Ethics, Springer, vol. 71(2), pages 109-124, March.
  • Handle: RePEc:kap:jbuset:v:71:y:2007:i:2:p:109-124
    DOI: 10.1007/s10551-006-0021-6

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    References listed on IDEAS

    1. Dworkin, Terry Morehead & Near, Janet P., 1997. "A Better Statutory Approach to Whistle-blowing," Business Ethics Quarterly, Cambridge University Press, vol. 7(01), pages 1-16, January.
    2. repec:bla:joares:v:31:y:1993:i::p:75-103 is not listed on IDEAS
    3. Near, Janet P. & Rehg, Michael T. & Van Scotter, James R. & Miceli, Marcia P., 2004. "Does Type of Wrongdoing Affect the Whistle-Blowing Process?," Business Ethics Quarterly, Cambridge University Press, vol. 14(02), pages 219-242, April.
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    Cited by:

    1. repec:eee:joacli:v:38:y:2017:i:c:p:1-13 is not listed on IDEAS
    2. Mechtenberg, Lydia & Muehlheusser, Gerd & Roider, Andreas, 2017. "Whistle-Blower Protection: Theory and Experimental Evidence," CEPR Discussion Papers 11898, C.E.P.R. Discussion Papers.
    3. repec:nwe:eajour:y:2018:i:2:p:145-174 is not listed on IDEAS
    4. repec:kap:jbuset:v:149:y:2018:i:1:d:10.1007_s10551-016-3035-8 is not listed on IDEAS
    5. Gregory A. Liyanarachchi & Ralph Adler, 2011. "Accountants’ Whistle-Blowing Intentions: The Impact of Retaliation, Age, and Gender," Australian Accounting Review, CPA Australia, vol. 21(2), pages 167-182, June.
    6. repec:kap:jbuset:v:146:y:2017:i:4:d:10.1007_s10551-016-3237-0 is not listed on IDEAS
    7. Syahrul Ahmar Ahmad Author_Email: & Malcolm Smith & Zubaidah Ismail & Rahimah Mohamed Yunos, 2011. "Internal Whistleblowing Intentions: Influence Of Internal Auditors’ Demographic And Individual Factors," Annual Summit on Business and Entrepreneurial Studies (ASBES 2011) Proceeding 2011-051-155, Conference Master Resources.
    8. Connie Bateman & Sean Valentine, 2010. "Investigating the Effects of Gender on Consumers’ Moral Philosophies and Ethical Intentions," Journal of Business Ethics, Springer, vol. 95(3), pages 393-414, September.
    9. Felicity Fallon & Barry J. Cooper, 2015. "Corporate Culture and Greed — The Case of the Australian Wheat Board," Australian Accounting Review, CPA Australia, vol. 25(1), pages 71-83, March.
    10. Norman, Carolyn Strand & Rose, Anna M. & Rose, Jacob M., 2010. "Internal audit reporting lines, fraud risk decomposition, and assessments of fraud risk," Accounting, Organizations and Society, Elsevier, vol. 35(5), pages 546-557, July.
    11. Barbara Arel & Cathy Beaudoin & Anna Cianci, 2012. "The Impact of Ethical Leadership, the Internal Audit Function, and Moral Intensity on a Financial Reporting Decision," Journal of Business Ethics, Springer, vol. 109(3), pages 351-366, September.
    12. Anna M. Rose & Jacob M. Rose & Carolyn S. Norman, 2013. "Is the objectivity of internal audit compromised when the internal audit function is a management training ground?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(4), pages 1001-1019, December.
    13. James E. Hunton & Jacob M. Rose, 2011. "Effects of Anonymous Whistle‐Blowing and Perceived Reputation Threats on Investigations of Whistle‐Blowing Allegations by Audit Committee Members," Journal of Management Studies, Wiley Blackwell, vol. 48(1), pages 75-98, January.
    14. Elka Johansson & Peter Carey, 2016. "Detecting Fraud: The Role of the Anonymous Reporting Channel," Journal of Business Ethics, Springer, vol. 139(2), pages 391-409, December.
    15. repec:bla:acctfi:v:58:y:2018:i:s1:p:493-527 is not listed on IDEAS
    16. repec:eee:joacli:v:41:y:2018:i:c:p:22-46 is not listed on IDEAS
    17. D. Lowe & Kelly Pope & Janet Samuels, 2015. "An Examination of Financial Sub-certification and Timing of Fraud Discovery on Employee Whistleblowing Reporting Intentions," Journal of Business Ethics, Springer, vol. 131(4), pages 757-772, November.
    18. repec:eee:accfor:v:39:y:2015:i:1:p:19-33 is not listed on IDEAS


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