Whistleblowers and Outcomes of Financial Misrepresentation Enforcement Actions |
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Authors: | ANDREW C CALL GERALD S MARTIN NATHAN Y SHARP JARON H WILDE |
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Institution: | 1. Arizona State University;2. American University;3. Texas A&M University;4. University of Iowa |
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Abstract: | Whistleblowers are ostensibly a valuable resource to regulators investigating securities violations, but whether there is a link between whistleblower involvement and the outcomes of enforcement actions is unclear. Using a data set of employee whistleblowing allegations obtained from the U.S. government and the universe of enforcement actions for financial misrepresentation, we find that whistleblower involvement is associated with higher monetary penalties for targeted firms and employees and with longer prison sentences for culpable executives. We also find that regulators more quickly begin enforcement proceedings when whistleblowers are involved. Our findings suggest that whistleblowers are a valuable source of information for regulators who investigate and prosecute financial misrepresentation. |
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Keywords: | G38 K22 K42 M40 M41 M48 whistleblowers enforcement actions fraud penalties financial reporting Securities and Exchange Commission |
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