Monetary awards for fraud whistleblowers may seem like a no-brainer, but a new study has found that offering cash for fraud detection may actually negatively effect individual's motivations.
“When you mention financial incentives to potential whistleblowers, you change the decision frame from ‘doing the right thing’ to that of a cost-benefit analysis,” stated James Wainberg, assistant professor of accounting at Florida Atlantic University’s College of Business and one of the study's authors. “As a result, when the perceived risks of reporting are greater than the potential rewards, people will be much less likely to report frauds than had they not been told about the existence of an incentive program to begin with.”
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