Whistleblowing and competition

Stage: Dissertation chapter, preparing for submission

Authors: Konstantinos Ioannidis

Abstract: Whistleblowing, i.e. the act of reporting illegal actions of an organisation by an employee, is an important tool to uncover corporate fraud. Previous experimental literature studied firms independently of each other. We hypothesise that competition between firms for market revenue may decrease whistleblowing. In an experiment, we use treatments with and without competition and find an insignificant reduction of whistleblowing under competition. We also investigate rationalisations used by participants to justify not blowing the whistle. We find that denial of responsibility plays an important role, and is slightly more strongly used under competition.

Keywords: whistleblowing, corporate fraud, competition, experiment

JEL codes: C92, D01, D83, D91

Presented at: 10^th Annual Conference on ``Contests: Theory and Evidence'' (Reading, 2024), 3^rd BUE-EBEL International Conference in Behavioural and Experimental Economics (Cairo, 2023), Economic Science Association World Meeting (Lyon, 2023)