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Does internal whistleblowing enhance firm innovation?

Author

Listed:
  • Lan, Fuyin
  • Chen, Yu
  • Ding, Zijun
  • Xu, Yonghao

Abstract

This paper examines whether and how internal whistleblowing enhances innovation. We have discovered that the establishment of an internal whistleblowing system help to increase firms' innovation output, in terms of patent application and citation. Furthermore, our paper draws on the monitoring effect of whistleblowing on CEO, and the evidence shows that whistleblowing reduces executives' misconduct and therefore increases investment in R&D. Besides, we also find that such monitoring effect between employees also improves firms' innovation efficiency. Finally, we find that whistleblowing has a positive impact on firm's profits among more innovative firms. This paper aims to investigate how employee monitoring enhances firm innovation, making a contribution to the growing literature on innovation.

Suggested Citation

  • Lan, Fuyin & Chen, Yu & Ding, Zijun & Xu, Yonghao, 2024. "Does internal whistleblowing enhance firm innovation?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924000784
    DOI: 10.1016/j.irfa.2024.103146
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