RELIGIOSITY, SHAREHOLDER LAWSUITS, AND EMPLOYEE WHISTLEBLOWING

Authors

  • Ying (Julie) Huang Associate Professor of Accounting School of Accountancy, University of Louisville
  • Kose John Charles William Gerstenberg Professor of Banking and Finance, Stern School of Business, New York University
  • Hua Christine Xin Assistant Professor of Accounting School of Accountancy, University of Louisville

DOI:

https://doi.org/10.60154/jaepp.2021.v22n1p27

Keywords:

religiosity, shareholder lawsuit, whistleblowing, corporate environment, corporate governance, external monitoring, QUI TAM

Abstract

We investigate how the level of religiosity in the county in which a firm is headquartered affects the incidence of shareholder lawsuits and employee whistleblowing. We hypothesize that the local religiosity promotes an environment in which employees are prone to be more truthful, less expedient and more prone to whistleblowing if their managers make untruthful disclosures and/or unethical decisions. Consequently, firm shareholders are more likely to trust managers by giving them the benefit of the doubt, which mitigates the prospective elements of the harmful deed and fraudulent intent associated with shareholder lawsuits. We find monetary incentives to be positively related to employee whistleblowing, but this effect disappears in religious firms. The effect of religiosity on lawsuits and whistleblowing is more pronounced. With weaker external monitoring. Collectively, these results are consistent with religiosity inducing a corporate environment with enhanced whistleblowing and ethical managerial decisions, leading to fewer outside shareholder lawsuits.

Pray for us, for we are sure that we have a clear conscience, desiring to act honorably in all things.
                                                                                                                                   —Hebrew 13:18, Christian New Testament
I’ve got a very deep faith, and I was led every step of the way.                                                                                                                                                                                                                                         —Citigroup whistleblower Professor Richard Bowen Half

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Published

2023-04-24

How to Cite

Huang, Y. (Julie), John, K., & Xin, H. C. (2023). RELIGIOSITY, SHAREHOLDER LAWSUITS, AND EMPLOYEE WHISTLEBLOWING. Journal of Accounting, Ethics & Public Policy, JAEPP, 22(1), 27. https://doi.org/10.60154/jaepp.2021.v22n1p27

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