Whistleblowing: motivations, corporate self-regulation, and the law

Abstract

Purpose – The purpose of this paper was to investigate the motivation behind whistleblowing, the tussle between internal and external whistleblowing and the extent whistleblowing laws in the UK and the USA are able to provide protection to whistleblowers. While employees need to be protected against unfair retaliations for making legitimate disclosure, employers seek to prevent irreparable damage from abusive disclosure of sensitive corporate information. Design/methodology/approach – A mix of legal examination and case study analysis of recent whistleblowing cases in the financial services sector is used in this study. It ergo relies mainly on primary data from recent applicable legislations and secondary data available in the public domain, journal articles, media reports and related academic texts. Findings – The study’s findings and analysis suggest that whistleblowing law in the UK, namely, the Public Interest Disclosure Act 1998 appears unable to promote effective whistleblowing awareness among working adults and adequate protection to whistleblowers. The situation is broadly similar in the USA with reports of serious employer retaliations though bounty awards available there have brought some relief to whistleblowers. Consequently, whistleblowing to help safeguard public interest is not appropriately encouraged and protected, suggesting the need for further reform initiatives. Research limitations/implications – The research mitigates the limits of primary secondary data analysis through triangulation of different sources of data and from the use of different perspectives. This paper suggests that whistleblowing laws in the UK and the USA, while assuring protection for workers for reporting wrongdoings internally or externally to prescribed regulatory agencies, can in theory help the early detection of corporate wrongdoings like those witnessed in the 2007 global financial crisis as employees are likely to first witness such activities. In practice, because of fear of employer reprisals and other social and economic costs, whistleblowers frequently hesitated until way too late. The findings suggest that business corporations missed such occasions to beef up their internal controls and demonstration of their commitment to ethical governance; and ergo would need to address such issues more effectively. Originality/value – The paper contributes insights from a combined corporate management and legal analysis perspective. It suggests that this type of approach and analysis of whistleblowing would be helpful to employers, employees, policymakers and regulators, as whistleblowing is a complex process involving not just the law, but social, psychological and economic considerations. The paper, by providing further insights on the motivations behind whistleblowing including other considerations as well as the impact of current whistleblowing laws in the UK and the USA, supports earlier suggestions on the lack of whistleblowing contributions to various current financial scandals until way too late...

EARLY DETECTION IN BOOSTING WHISTLEBLOWING INTEREST (Case Study at Pratama Tax Office of South Sidoarjo)

“…So, if the reports are not acted upon, the whistleblowers will not report for the second time (PCaW, 2013). The result of this study is also supported by the result of the study conducted by Yeoh (2014)that the factor causing a person to be encouraged not to report fraud actions is not only in the form of threats, but also the absence of the seriousness of the organization in handling the fraud.…”

Pentingnya Penilaian Etis Dalam Pengungkapan Skandal Akuntansi

“…Penilaian etis merupakan hal yang dilakukan pegawai terhadap organisasi atau pun sesama pegawai dalam menjalankan perilaku etis (Gholami et al, 2015). Indikator yang digunakan dalam mengukur penilaian etis oleh Yeoh (2014) (≤ 0,25). Se mentara itu, pengaruh antarvariabel dalam sistem yang dibangun pada penelitian di hitung dengan menggunakan nilai predictive relevance (Q 2 ) yang bertujuan untuk menilai validitas prediktif pada variabel independen.…”

Making regulation fit by taking irrationality into account: the case of the whistleblower

“…Moberly (2007) shows that only 3.6% of whistleblower won relief after experiencing retaliation through SOX within the first 3 years after its introduction. This is emphasized again by Yeoh (2014) who argues that neither the US (SOX and DFA), nor the UK's PIDA brings actual whistleblower protection. Schmidt (2005) argues that rewards and protection granted for external whistleblowing may lead to opportunistic behavior that reduces organizational efficiency.…”