Lydia Mechtenberg, Gerd Muehlheusser, Andreas Roider, 04 June 2017

Whistle-blowing by employees is important for uncovering corporate fraud. This column studies the effectiveness of recent laws and policy recommendations that aim to enhance willingness to report incidents and to increase deterrence by improving the protection of whistle-blowers. Easily attainable protection leads to more truthful reports, but also to more fraudulent claims, which makes prosecutors less likely to investigate and hampers deterrence. More stringent requirements for protection dampen these unintended side effects.

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