We use large increases in unemployment insurance (UI) benefits to study the effects of expected retaliation costs on employee whistleblowing. Increases in UI benefits reduce the costs that arise from a job loss, one of the costliest forms of retaliation. We find that increases in UI benefits increase the number of facility-level employee workplace safety complaints filed with the regulator. Furthermore, UI benefit increases also result in more violations and more penalties. The effects are concentrated in firms where retaliation is more likely as measured by weaker employee relations, internal controls, and monitoring. Our findings show the importance of reducing retaliation costs to tap into employees’ knowledge of misconduct.

We study the effects of visits by headquarters' managers on facility-level misconduct. These visits are central to monitoring, but are difficult to observe for a large sample of firms. We use the staggered introduction of airline routes to identify exogenous reductions in travel time between headquarters and facilities as our measure of visits and test whether the reductions affect misconduct. We find that for the at-risk sample, travel-time reductions decrease the number of violations by 2 percent and penalties by 23.4 percent, suggesting that management focuses on reducing costlier violations, as opposed to simply reducing the number of violations. These effects are concentrated in firms with weaker control systems, suggesting that strong controls can act as substitutes for visits. Furthermore, the introduction of broadband internet attenuates, but does not eliminate the effect of reductions on misconduct. Finally, we find that reductions result in greater misconduct when firms are subject to performance pressure.

This paper examines whether fraud allegations affect firms’ contracting with the government. Using a data set of whistleblower allegations brought under the False Claims Act against firms accused of defrauding the government, we find that federal agencies do not reduce the total dollar volume of contracts with accused firms; however, they substitute approximately 14% of the harder‐to‐monitor cost‐plus contracts for fixed‐price contracts. This effect is concentrated in the procurement of services and explained by contract and service substitution. Finally, we find that after the conclusion of the investigation, the government reduces the contract dollar volume by approximately 15% for cases that resulted in a settlement. Our findings indicate that contract‐design changes are used to mitigate uncertainty in suppliers’ reputation.

This study examines whether enterprise resource planning (ERP) implementations are associated with reductions in corporate misconduct. Specifically, we study the relation between staggered facility-level rollouts of ERP systems and facility-level regulatory violations across a large sample of U.S. firms. Our results indicate that facility-level ERP adoptions are associated with substantial reductions in local violations and penalties. Additional analyses suggest that the effects are more pronounced among facilities incorporating advanced analytics into their systems and among workforces that are less resistant to technology change. Overall, our results suggest that ERP systems generate indirect effects that enhance compliance outcomes across a wide range of violations.

We study the effect of financial incentives on whistleblowing and the consequences for whistleblowers under the cash‐for‐information program of the False Claims Act (FCA). Exploiting appeals‐court decisions that increase financial incentives for whistleblowing, we find that greater incentives increase the number of lawsuits filed with the regulator, the regulator's investigation length, the percentage of intervened lawsuits, and the percentage of settled lawsuits. Using information from lawsuits, a professional networking site, and background checks for up to 1,168 whistleblowers, we find that whistleblowers’ long‐term annual income decreases by approximately 8.6% or $6,500 but do not find evidence of social costs. In comparison, whistleblowers can expect to receive approximately $140,000 for blowing the whistle. Overall, our results suggest that the FCA cash‐for‐information program helps expose corporate misconduct and helps compensate whistleblowers for their income loss.

We examine drivers and consequences of U.S. Department of Justice (DOJ) oversight of whistleblower cases of corporate fraud against the government. We find that the DOJ is more likely to intervene in and conduct longer investigations of cases that have a higher chance of victory and yield greater monetary proceeds, indicating that DOJ enforcement is influenced by its performance measures. DOJ intervention also affects the firm- and aggregate-level fraud environment. Firms subject to DOJ intervention improve their employee relations, internal controls, and board independence, and experience lower future whistleblowing risk. Whistleblowers avoid courts and agencies with low DOJ intervention rates. In contrast, we do not find that cases pursued by whistleblowers alone affect firms' or whistleblowers' behavior, suggesting that public enforcement through DOJ intervention has a greater deterrent effect on fraud than private enforcement by whistleblowers acting alone.