Under which conditions are whistleblowing "best practices" best?

Jian Zhang, Kurt Pany, Philip Reckers

Research output: Contribution to journalArticlepeer-review

26 Scopus citations


Public companies are required by the Sarbanes-Oxley Act of 2002 to establish an anonymous reporting (whistleblowing) channel for employee reporting of questionable accounting practices. Corporate audit committees are provided flexibility in implementing this requirement and a controversial choice is the type of reporting channel. Most commentators argue that "best practices" call for an externally administered "hotline." To examine the efficacy of externally administered versus internally administered channels we conducted a behavioral experiment. Our results reveal a significant main effect with reporting intentions being greater if the hotline is administered externally. We then examine whether this finding is robust across selected environmental and employee-specific conditions and find that it is not. Our results suggest that the primary reporting benefits of an externally administered hotline are for organizations with a history of poor responsiveness to whistleblowing and for employees registering relatively low on the proactivity scale. Specifically, we find that an externally administered hotline obtains higher reporting intentions under conditions wherein a previous incidence of whistleblowing notably failed to achieve a good outcome. Also, this effect is only statistically significant for participants registering as relatively low on a "proactivity" scale.

Original languageEnglish (US)
Pages (from-to)171-181
Number of pages11
Issue number3
StatePublished - Aug 1 2013


  • Anonymous reporting channel
  • Fraudulent financial reporting
  • Proactivity
  • Whistleblowing

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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