Study: Financial Rewards May Discourage Whistleblowers in Certain Circumstances

By:
Chris Gaetano
Published Date:
Oct 6, 2017
Lying Man

A recent study has found that adding a financial incentive can, in certain cases, actually inhibit whistleblowers because the possibility of reward changes the choice from a moral decision to a cost-benefit one, according to Accounting Today.

The researchers, from Wilfrid Laurier University, Providence College, and Florida Atlantic University, said that changing an intrinsic motivator, like "doing the right thing," to an extrinsic one, like "I'll get paid" can essentially "hijack" someone's moral motivations. 

"Applying this theory, we conducted an experiment and found that, in certain contexts, incentive programs can inhibit whistleblower reporting to a greater extent than had no incentives been offered at all," said the study abstract. 

While there has been increased focus on financially rewarding whistleblowers, Accounting Today notes that this has come with demanding a minimum threshold for reporting: for instance, the SEC will only offer rewards if at least $1 million is recovered. The researchers found that when there is a monetary incentive, fraud is less likely to be reported if the amount committed is below a given threshold. This means that, rather than reporting fraud because it's the right thing to do, rewards make people consider whether it would be worth their while to do so, given potential rewards. The study also found that such circumstances significantly delay reporting until the problem is too big to ignore.

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