nach oben

Journal of Business Ethics

Erschienen in:

01.03.2012

The Effects of Contextual and Wrongdoing Attributes on Organizational Employees’ Whistleblowing Intentions Following Fraud

verfasst von: Shani N. Robinson, Jesse C. Robertson, Mary B. Curtis

Erschienen in: Journal of Business Ethics | Ausgabe 2/2012

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Recent financial fraud legislation such as the Dodd–Frank Act and the Sarbanes–Oxley Act (U.S. House of Representatives, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, [H.R. 4173], 2010; U.S. House of Representatives, The Sarbanes–Oxley Act of 2002, Public Law 107-204 [H.R. 3763], 2002) relies heavily on whistleblowers for enforcement, and offers protection and incentives for whistleblowers. However, little is known about many aspects of the whistleblowing decision, especially the effects of contextual and wrongdoing attributes on organizational members’ willingness to report fraud. We extend the ethics literature by experimentally investigating how the nature of the wrongdoing and the awareness of those surrounding the whistleblower can influence whistleblowing. As predicted, we find that employees are less likely to report: (1) financial statement fraud than theft; (2) immaterial than material financial statement fraud; (3) when the wrongdoer is aware that the potential whistleblower has knowledge of the fraud; and (4) when others in addition to the wrongdoer are not aware of the fraud. Our findings extend whistleblowing research in several ways. For instance, prior research provides little evidence concerning the effects of fraud type, wrongdoer awareness, and others’ awareness on whistleblowing intentions. We also provide evidence that whistleblowing settings represent an exception to the well-accepted theory of diffusion of responsibility. Our participants are professionals who represent the likely pool of potential whistleblowers in organizations.

Vorheriger Artikel Stakeholder Perspectives on CSR of Mining MNCs in Argentina

Nächster Artikel The Effects of Corporate Ethical Values and Personal Moral Philosophies on Ethical Intentions in Selling Situations: Evidence from Turkish, Thai, and American Businesspeople

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

The ACFE is a U.S.-based organization that researches fraud in organizational settings and provides anti-fraud resources and training. More details are available on the organization’s website (http://www.acfe.com).

Our classification of wrongdoing and contextual characteristics is similar to that of prior research (e.g., Mesmer-Magnus and Viswesvaran 2005) and standards such as Statement on Auditing Standards (SAS) No. 99. In the U.S., SAS No. 99 is the current standard that describes the auditor’s responsibilities with respect to fraud detection, common fraudulent financial reporting and theft schemes, and conditions that can lead to fraud (AICPA 2002).

We remind the reader of research, referenced earlier, that financial statement fraud typically causes greater financial loss than theft (ACFE 2010); it is, therefore, potentially highly costly to the organization, despite possible perceptions of short-term benefits to the organization.

Gundlach et al.’s (2003) model did not indicate a direct link between attributions and whistleblowing decisions, but rather suggests that both judgments of responsibility and emotions are mediators of the relationship between attributions and whistleblowing decision. Therefore, while the attribution component of their model is relevant for our discussion, we do not provide a direct test of all assertions made within their framework.

Kaplan et al. (2010) manipulated type of fraud (financial statement fraud or theft) as part of their examination of the relationship between social confrontation and whistleblowing. Their study differs from ours in two important respects. First, Kaplan et al. (2010, p. 51) focused on social confrontation and included the two fraud types “to broaden the generalizability of the findings”. They found that fraud type did not moderate the relationship between social confrontation and whistleblowing intentions. Second, the primary dependent measure used by Kaplan et al. (2010) is the difference in reporting intentions to the participant’s supervisor or to the internal auditing department. Our focus is not on preferred report recipient, but on whistleblowing intentions in general.

SAS No. 107 guides auditors on the application of materiality (AICPA 2006). This standard indicates that auditors should not ignore quantitatively immaterial misstatements because they could, in aggregate, cause the financial statements to be materially misstated.

Research employing seriousness as an independent variable tends to adopt a similar approach, eliciting perceptions of seriousness of a scenario’s unethical behavior (Brennan and Kelly 2007). These studies elicit perceived seriousness across various scenarios and across subjects, finding generally that perceptions of seriousness increase willingness to whistleblow. However, individuals have difficulty comparing the seriousness of differing types of fraud. Of greater concern are differences in perceived seriousness between-subjects—one person’s serious infraction is another observer’s minor transgression. Therefore, a more direct test of the impact of seriousness on hotline use is the manipulation of seriousness within the experiment, rather than merely assessing individual perceptions of a given scenario.

While the wrongdoer might never definitively identify the whistleblower, the more important issue when examining whistleblowing intentions is the potential whistleblower’s perception of the likelihood that the wrongdoer might discover his/her identity. Indeed, even in the presence of ethics hotlines, employees are not always convinced that their identity will remain protected (Metropolitan Corporate Counsel 2005; Finn 1995).

The Kitty Genovese murder occurred on a New York City street in 1964. Multiple accounts of the details surrounding the murder suggest that 38 witnesses passively watched the murder from their homes for approximately 30 min. However, court transcripts and other evidence from the subsequent murder trial indicate that the story was embellished and that actual number of witnesses to the murder was much fewer than the 38. Yet, the story played an important role in stimulating psychology research into helping behavior and the diffusion of responsibility concept (Manning et al. 2007).

Darley and Latane (1968) defined the bystander effect as the tendency for individuals to choose not to help a victim of an undesirable event because others are also aware of the situation. Their explanation for this effect lies in diffusion of responsibility, or the transition of responsibility from the individual to others who also observe.

Research supports the idea that internal auditors may also be classified as whistleblowers (Miceli et al. 1991; Near et al. 1993; Xu and Ziegenfuss 2008), though not all share this view (Jubb 2000).

The use of human participants was approved by the appropriate university’s institutional review board, and all participants voluntarily consented to participate.

The Sarbanes–Oxley Act (SOX) is a landmark law with significant impact on financial reporting and internal controls for U.S. public companies. With respect to reporting potentially unethical acts, SOX Section 301 requires the establishment of anonymous whistleblowing methods, as through a hotline (U.S. House of Representatives 2002). The U.S. House of Representatives is one of two branches of the national legislative assembly.

We report one-tailed P values for hypothesized relationships only.

Experience appears to have minimal impact on our results. In addition to our hypotheses being robust to controlling for experience, we examined the relationship between experience and participants’ assessment of the personal costs of whistleblowing in each of the six scenarios; the personal cost question had end points of 1 = “no personal cost” and 5 = “high personal cost”. The only significant correlation was a positive relationship between experience and personal cost in the immaterial financial fraud scenario (r = 0.217, P = 0.011, two-tailed).

The Dodd–Frank Act offers potential monetary incentives in fraud cases that produce more than $1,000,000 in fines if the whistleblower provides original information that leads to the settlement of the case (U.S. House of Representatives 2010).

Kruglanski (1975, p. 103) defined demand bias as “error in inference regarding the cause of an observed effect.” Such bias may arise when subjects can discern the experimental hypothesis and are motivated to respond in a “good subject” role. Anonymous surveys of professionals, such as that used in our study, should greatly reduce that motivation (Schepanski et al. 1992).

Alexander, R., Blay, A., & Hurtt, R. (2006). An examination of convergent validity between in-lab and out-of-lab internet-based experimental accounting research. Behavioral Research in Accounting, 18, 207–217.CrossRef

American Institute of Certified Public Accountants (AICPA). (2002). Statement on Auditing Standards (SAS) No. 99: Consideration of fraud in a financial statement audit. New York, NY: AICPA.

American Institute of Certified Public Accountants (AICPA). (2006). Statement on Auditing Standards (SAS) No. 107: Audit risk and materiality in conducting an audit. New York, NY: AICPA.

Association of Certified Fraud Examiners (ACFE). (2010). 2010 Report to the nations on occupational fraud and abuse. Austin, TX: ACFE.

Brennan, N., & Kelly, J. (2007). A study of whistleblowing among trainee auditors. The British Accounting Review, 39(1), 61–87.CrossRef

Burns, N., & Kedia, S. (2006). The impact of performance-based compensation on misreporting. Journal of Financial Economics, 79(1), 35–67.CrossRef

Campbell, C., & Martinko, M. (1998). An integrative attributional perspective of empowerment and learned helplessness: A multimethod field study. Journal of Management, 24(2), 173–200.

Cheng, Q., & Warfield, T. (2005). Equity incentives and earnings management. The Accounting Review, 80(2), 441–476.CrossRef

Chung, J., & Monroe, G. (2003). Exploring social desirability bias. Journal of Business Ethics, 44(4), 291–302.CrossRef

Cohen, J., Pant, L., & Sharp, D. (1998). The effect of gender and academic discipline diversity on the ethical evaluations, ethical intentions and ethical orientation of potential public accounting recruits. Accounting Horizons, 12(3), 250–270.

Cohen, J., Pant, L., & Sharp, D. (2001). An examination of differences in ethical decision-making between Canadian business students and accounting professionals. Journal of Business Ethics, 30(4), 319–336.CrossRef

Curtis, M., & Taylor, E. (2009). Whistleblowing in public accounting: Influence of identity disclosure, situational context and personal characteristics. Accounting and Public Interest, 9(1), 191–220.CrossRef

Darley, J., & Latane, B. (1968). Bystander intervention in emergencies: Diffusion of responsibility. Journal of Personality and Social Psychology, 8(4), 377–383.CrossRef

Efendi, J., Srivastava, A., & Swanson, E. (2007). Why do corporate managers misstate financial statements? The role of option compensation and other factors. Journal of Financial Economics, 85(3), 667–708.CrossRef

Financial Accounting Standards Board (FASB) (2011). Financial statement presentation—Joint project of the IASB and FASB. http://www.fasb.org/project/financial_statement_presentation.shtml. Last accessed 7 March 2011.

Finn, D. (1995). Ethical decision making in organizations: A management employee-organization whistleblowing model. Research on Accounting Ethics, 1, 291–313.

Fiske, S., & Taylor, S. (1984). Social cognition. Reading, MA: Addison-Wesley.

Graham, J. (1986). Principled organizational dissent: A theoretical essay. Research in Organizational Behavior, 8, 1–52.

Grant, C. (2002). Whistle blowers: Saints of secular culture. Journal of Business Ethics, 39(4), 391–399.CrossRef

Gravetter, F., & Forzano, L.-A. (2009). Research methods for the behavioral sciences (3rd ed.). Belmont, CA: Wadsworth Cengage Learning.

Gundlach, M., Douglas, S., & Martinko, M. (2003). The decision to blow the whistle: A social information processing framework. Academy of Management Review, 28(1), 107–123.

Harman, G. (1999). Moral philosophy meets social psychology: Virtue ethics and the fundamental attribution error. Proceedings of the Aristotelian Society (New Series), 99, 315–331.

Harvey, J., & Weary, G. (1984). Current issues in attribution theory and research. Annual Review of Psychology, 35, 427–459.CrossRef

Hooks, K., Kaplan, S., & Schultz, J. (1994). Enhancing communication to assist in fraud prevention and detection. Auditing: A Journal of Practice and Theory, 13(2), 86–117.

Jubb, P. (2000). Auditors as whistleblowers. International Journal of Auditing, 4(2), 153–167.CrossRef

Kaplan, S., Pope, K., & Samuels, J. (2010). The effect of social confrontation on individuals’ intentions to internally report fraud. Behavioral Research in Accounting, 22(2), 51–67.CrossRef

Kaplan, S., & Whitecotton, S. (2001). An examination of auditors’ reporting intentions when another auditor is offered client employment. Auditing: A Journal of Practice and Theory, 20(1), 45–63.CrossRef

Kruglanski, A. (1975). The human subject in the psychology experiment: Fact and artifact. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 8). New York, NY: Academic Press.

Latane, B., & Darley, J. (1968). Group inhibition of bystander intervention in emergencies. Journal of Personality and Social Psychology, 10(3), 215–221.CrossRef

Latane, B., & Nida, S. (1981). Ten years of research on group size and helping. Psychological Bulletin, 89(2), 308–324.CrossRef

Manning, R., Levine, M., & Collins, A. (2007). The Kitty Genovese murder and the social psychology of helping: The parable of the 38 witnesses. American Psychologist, 62(6), 555–562.CrossRef

Martinko, M. J., Gundlach, M. J., & Douglas, S. C. (2002). Toward an integrative theory of counterproductive workplace behavior: A causal reasoning perspective. International Journal of Selection and Assessment, 10(1/2), 36–50.CrossRef

Mesmer-Magnus, J., & Viswesvaran, C. (2005). Whistleblowing in organizations: An examination of correlates of whistleblowing intentions, actions, and retaliation. Journal of Business Ethics, 62(3), 277–297.CrossRef

Metropolitan Corporate Counsel. (2005). Project: Corporate counsel—Legal services providers; successful implementation of an ethics and compliance training system: Some key considerations. January, Northeast Edition

Miceli, M., & Near, J. (1985). Characteristics of organizational climate and perceived wrongdoing associated with whistle-blowing decisions. Personnel Psychology, 38(3), 525–544.CrossRef

Miceli, M., & Near, J. (1988). Individual and situational correlates of whistleblowing. Personnel Psychology, 41(2), 267–281.CrossRef

Miceli, M., Near, J., & Dworkin, T. (2008). Whistleblowing in organizations. New York, NY: Routledge, Taylor and Francis Group.

Miceli, M., Near, J., & Schwenk, C. (1991). Who blows the whistle and why? Industrial and Labor Relations Review, 45(1), 113–130.CrossRef

Near, J., Dworkin, T., & Miceli, M. (1993). Explaining the whistle-blowing process: Suggestions from power theory and justice theory. Organization Science, 4(3), 393–411.CrossRef

Near, J., & Miceli, M. (1995). Effective whistleblowing. Academy of Management Review, 20(3), 679–708.

Near, J., Van Scotter, J., Rehg, M., & Miceli, M. (2004). Does type of wrongdoing affect the whistle-blowing process? Business Ethics Quarterly, 14(2), 219–242.

Nunnally, J. (1978). Psychometric theory (2nd ed.). New York, NY: McGraw-Hill.

Pany, K., & Reckers, P. (1987). Within- vs. between-subjects experimental designs: A study of demand effect. Auditing: A Journal of Practice and Theory, 7(1), 39–53.

Pauls, C., & Stemmler, G. (2003). Substance and bias in social desirability responding. Personality and Individual Differences, 35(2), 263–275.CrossRef

Perry, J. (1993). Whistleblowing, organizational performance, and organizational control. In H. Frederickson (Ed.), Ethics and public administration (pp. 79–99). Armonk, NY: M.E. Sharpe.

Ribstein, L. (2002). Market vs. regulatory responses to corporate fraud: A critique of the Sarbanes-Oxley Act of 2002. Journal of Corporation Law, 28(1), 1–67.

Ross, L. (1977). The intuitive psychologist and his shortcomings: Distortions in the attribution process. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 10, pp. 174–221). New York, NY: Academic Press.

Schepanski, A., Tubbs, R., & Grimlund, R. (1992). Issues of concern regarding within- and between-subjects designs in behavioral accounting research. Journal of Accounting Literature, 11, 121–150.

Schultz, J., Jr., Johnson, D., Morris, D., & Dyrnes, S. (1993). An investigation of the reporting of questionable acts in an international setting. Journal of Accounting Research, 31(Suppl.), 75–103.CrossRef

Taylor, E., & Curtis, M. (2010). An examination of the layers of workplace influences in ethical judgments: Whistleblowing likelihood and perseverance in public accounting. Journal of Business Ethics, 93, 21–37.CrossRef

Trevino, L., & Victor, B. (1992). Peer reporting of unethical behavior: A social context perspective. Academy of Management Journal, 35(1), 38–64.CrossRef

Trevino, L., Weaver, G., & Reynolds, S. (2006). Behavioral ethics in organizations: A review. Journal of Management, 32(6), 951–990.CrossRef

U.S. House of Representatives. (2002). The Sarbanes-Oxley Act of 2002, Public Law 107-204 [H.R. 3763]. Washington, DC: Government Printing Office.

U.S. House of Representatives. (2010). Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, [H.R. 4173]. Washington, DC: Government Printing Office.

Wells, J. (2003). The padding that hurts. Journal of Accountancy, 195(2), 67–69.

Xu, Y., & Ziegenfuss, D. (2008). Reward systems, moral reasoning, and internal auditors’ reporting wrongdoing. Journal of Business Psychology, 22(4), 323–331.CrossRef

Titel: The Effects of Contextual and Wrongdoing Attributes on Organizational Employees’ Whistleblowing Intentions Following Fraud
verfasst von: Shani N. Robinson
Jesse C. Robertson
Mary B. Curtis
Publikationsdatum: 01.03.2012
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 2/2012
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-011-0990-y

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 2/2012

Organizational Citizenship Behavior and the Public Service Ethos: Whither the Organization?

Investigating the Relationship Between Protestant Work Ethic and Confucian Dynamism: An Empirical Test in Mainland China

The Effects of Corporate Ethical Values and Personal Moral Philosophies on Ethical Intentions in Selling Situations: Evidence from Turkish, Thai, and American Businesspeople

“My Country’s Future”: A Culture-Centered Interrogation of Corporate Social Responsibility in India

Stakeholder Perspectives on CSR of Mining MNCs in Argentina

On the Ethics of Management Research: An Exploratory Investigation

Premium Partner