AN EXAMINATION OF THE IMPACT OF AN EVIDENTIARY PRIVILEGE PROTECTING CORPORATE WHISTLEBLOWERS ON INTENTION TO REPORT WRONGDOING

Abstract

The goals of an effective whistleblowing system are to encourage whistleblowing as a fraud detection tool and to deter wrongdoing by increasing a wrongdoer’s risk of detection. Public companies are mandated to provide internal, confidential hotlines through which employees can report fraudulent or illegal activities, though current law does not protect the disclosure of the whistleblower’s identity in subsequent judicial or administrative proceedings. Requiring a whistleblower to reveal his or her identity carries both psychological and financial risks, and reduces the likelihood of reporting. Yet obtaining a whistleblower’s name enables employers to more thoroughly investigate claims of wrongdoing and enact reforms. The present study used experimental methodology to assess the impact of an evidentiary privilege prohibiting disclosure of the whistleblower’s identity in exchange for the whistleblower’s name on the personal cost of reporting and reporting likelihood. Results showed that the likelihood of reporting was significantly increased and the perceived personal cost was significantly decreased when a whistleblower required to provide his or her name to a hotline was afforded an evidentiary privilege. The study informs policymakers about the impact that an evidentiary privilege protecting whistleblowers would have on the likelihood of reporting and sets the stage for further exploration of the feasibility of such an evidentiary privilege being implemented.