The effects of compensation structures and monetary rewards on managers’ decisions to blow the whistle

Jacob M. Rose, Alisa G. Brink, Carolyn Strand Norman

Research output: Contribution to journalArticleResearchpeer-review

6 Citations (Scopus)

Abstract

Recent research indicates that compensation structure can be used by firms to discourage their employees from whistleblowing. We extend the ethics literature by examining how compensation structures and financial rewards work together to influence managers’ decisions to blow the whistle. Results from an experiment indicate that compensation with restricted stock, relative to stock payments that lack restrictions, can enhance the likelihood that managers will blow the whistle when large rewards are available. However, restricted stock can also threaten the effectiveness of whistleblowing systems without the presence of large financial rewards for whistleblowing. Thus, the large potential rewards for whistleblowing enacted by the Dodd–Frank Act appear timely as firms are moving toward compensation agreements that include greater proportions of restricted stock.

Original languageEnglish
Pages (from-to)853-862
Number of pages10
JournalJournal of Business Ethics
Volume150
Issue number3
DOIs
Publication statusPublished - Jul 2018
Externally publishedYes

Keywords

  • Restricted stock
  • Rewards
  • Stock compensation
  • Whistleblowing

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