An economic rationale for firing whistleblowers

Baç, Mehmet (2009) An economic rationale for firing whistleblowers. European journal of law and economics, 27 (3). pp. 233-256. ISSN 0929-1261 (Print) 1572-9990 (Online)

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Organization members disclosing their superiors' violations of duty are characterized by high ethical standards and, surprisingly often, fired for blowing the whistle. This paper provides an economic rationale for firing whistleblowers in a model where only the "ethical" type of agent can internally report the manager's violation of duty. Revelation of an ethical type in the organization increases the perceived future probability of detecting and punishing the manager. Replacing the ethical type by an agent of unknown type restores this probability to its initial level, and this is optimal in organizations in which the standard of proof in establishing the manager's violation of duty is low.
Item Type: Article
Uncontrolled Keywords: Incentives; Whistleblowing; Information; Organization
Subjects: H Social Sciences > HB Economic Theory
K Law > K Law in general. Comparative and uniform law. Jurisprudence
Divisions: Faculty of Arts and Social Sciences
Depositing User: Mehmet Baç
Date Deposited: 14 Jul 2009 11:28
Last Modified: 26 Apr 2022 08:28

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