The Availability of Reporting Channels, Tone at the Top, and Whistleblowing Intentions

2021 ◽  
Author(s):  
Matthew J. Hayes ◽  
D. Jordan Lowe ◽  
Kurt Pany ◽  
Jian Zhang
Keyword(s):  
Best Practice ◽  
Private Companies ◽  
Public Companies ◽  
Tone At The Top ◽  
Incremental Effectiveness ◽  
Dual Channels ◽  
Reporting Intentions ◽  
Reporting Channels

SOX requires the establishment of anonymous whistleblowing channels for public companies, but private companies are free to implement the channel(s) of their choosing. Although anonymous channels have long been considered a “best practice”, the evidence on their efficacy is mixed, creating confusion as to how private companies should proceed. Additionally, most studies comparing non-anonymous and anonymous channels have used a within-participants design, where both channels are available, limiting their ability to determine the incremental effectiveness of different whistleblowing systems. We find that offering either an anonymous channel or dual channels improves reporting intentions, relative to a non-anonymous channel, but primarily when tone at the top is weak. When tone at the top is strong, reporting intentions are not statistically different across the three systems. We also find no evidence that dual channels improve whistleblowing intentions relative to an anonymous channel, regardless of the tone at the top.

Under Which Conditions are Whistleblowing “Best Practices” Best?

2013 ◽  
Vol 32 (3) ◽  
pp. 171-181 ◽  
Author(s):  
Jian Zhang ◽  
Kurt Pany ◽  
Philip M. J. Reckers
Keyword(s):  
Best Practices ◽  
Audit Committees ◽  
Behavioral Experiment ◽  
Public Companies ◽  
Anonymous Reporting ◽  
Sarbanes Oxley ◽  
Main Effect ◽  
History Of ◽  
Reporting Channel ◽  
Reporting Intentions

SUMMARY: Public companies are required by the Sarbanes-Oxley Act of 2002 to establish an anonymous reporting (whistleblowing) channel for employee reporting of questionable accounting practices. Corporate audit committees are provided flexibility in implementing this requirement and a controversial choice is the type of reporting channel. Most commentators argue that “best practices” call for an externally administered “hotline.” To examine the efficacy of externally administered versus internally administered channels we conducted a behavioral experiment. Our results reveal a significant main effect with reporting intentions being greater if the hotline is administered externally. We then examine whether this finding is robust across selected environmental and employee-specific conditions and find that it is not. Our results suggest that the primary reporting benefits of an externally administered hotline are for organizations with a history of poor responsiveness to whistleblowing and for employees registering relatively low on the proactivity scale. Specifically, we find that an externally administered hotline obtains higher reporting intentions under conditions wherein a previous incidence of whistleblowing notably failed to achieve a good outcome. Also, this effect is only statistically significant for participants registering as relatively low on a “proactivity” scale.

scholarly journals Hagnýting menntunar meðal háskólamenntaðs starfsfólks einkarekinna fyrirtækja og opinberra stofnana

2017 ◽  
Vol 13 (1) ◽  
pp. 151
Author(s):  
Ingi Rúnar Eðvarðsson ◽  
Guðmundur Kristján Óskarsson ◽  
Jason Már Bergsteinsson
Keyword(s):  
Social Science Research ◽  
Science Research ◽  
Target Population ◽  
University Education ◽  
Private Companies ◽  
Public Companies ◽  
National Population Register ◽  
The Difference ◽  
The One ◽  
The University

The aim of the article is to examine whether there is a difference in the utilization of education among university educated employees in private companies on the one hand and public institutions on the other. The target population of the research was based on a random sample drawn from the National Population Register by the National Survey of the Social Science Research Institute of the University of Iceland from 9 March to 9 April 2016. The survey included 2,001 individuals, aged 18 or above, from all over the country. A total of 1,210 persons responded to the survey. This research only involved those participants in the sample who had completed a university education and were salaried employees in Iceland. After data cleansing, 374 participants remained, 178 males and 196 females. The initial results of the research indicated that 20.3% of participants were over-educated for their jobs. The majority of females work in public companies, while the majority of males work in private companies. Individuals with under-education are most likely to be found within public companies, at the same time as over-educated individuals are most likely to be found in private companies (the difference lies in the under- and over-education of females). Those working in public companies come primarily from educational and health sicences, while engineers and natural sicentists work primarily at private companies. Incomes are higher in private companies.

Financial Reporting Fraud: Public and Private Companies

2016 ◽  
Vol 1 (1) ◽  
pp. A27-A41 ◽  
Author(s):  
A. Scott Fleming ◽  
Dana R. Hermanson ◽  
Mary-Jo Kranacher ◽  
Richard A. Riley
Keyword(s):  
Financial Reporting ◽  
Primary Objective ◽  
Private Company ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Multivariate Tests ◽  
Public Company ◽  
Public Versus Private ◽  
Financial Reporting Fraud

ABSTRACT This study uses survey data gathered by the Association of Certified Fraud Examiners (ACFE) and provided to the Institute for Fraud Prevention (IFP) to examine differences in the profile of financial reporting fraud (FRF) between private companies and public companies. Although private companies represent a significant portion of the economy, largely due to lack of data on these companies, most research on FRF examines only public companies. The primary objective of this study is to determine how private company FRF is different from FRF in public companies. Our multivariate tests reveal that public companies have stronger anti-fraud environments, are more likely to have frauds that involve timing differences, tend to experience larger frauds, have frauds that involve a larger number of perpetrators, and are less likely to have frauds that are discovered by accident. Overall, it appears that the stronger anti-fraud environment in public companies leads public company FRF perpetrators to use less obvious fraud methods (i.e., timing differences) and to involve larger fraud teams to circumvent the controls. These public company frauds are larger than in private companies, and their larger size may make them more likely to be detected through formal means, rather than by accident. Based on the results, we encourage auditors and others to be particularly attuned to the unique risks of the public versus private setting.

Commentary on the Companies Act 2006 Model Articles

2020 ◽  
Author(s):  
Leslie Kosmin ◽  
Catherine Roberts
Keyword(s):  
Standard Form ◽  
Private Companies ◽  
Public Companies ◽  
Secretary Of State

Under CA 2006, s 19 the Secretary of State has power to prescribe standard form articles of association for companies and different model articles may be prescribed for different descriptions of companies. Provision is made for private companies limited by shares, private companies limited by guarantee and public companies. They are contained in Schedules 1 to 3 of the Companies (Model Articles) Regulations 2008. It is not compulsory for companies to adopt all or any of the provisions that are contained in the model articles, and in certain situations there is much to be said for having articles that are drafted to meet the particular requirements of individual companies.

14. Meetings and investor engagement

Company Law ◽  
2019 ◽  
pp. 339-374
Author(s):  
Lee Roach
Keyword(s):  
Financial Reporting ◽  
Institutional Investors ◽  
Majority Vote ◽  
General Meeting ◽  
Annual General ◽  
Annual General Meeting ◽  
Private Companies ◽  
Class Meeting ◽  
Public Companies ◽  
The Uk

This chapter examines the role and importance of general meetings, the significant body of procedural rules by which general meetings are run, and the extent to which a company's members actually engage with general meetings. Members make decisions in one of two ways: through a resolution or by unanimous assent. A resolution is simply a vote that requires a specified majority vote in its favour in order to be passed. The resolutions of public companies must be passed at meetings, whereas resolutions of private companies can be passed at meetings or via a written resolution. Two forms of general meeting existed: the annual general meeting and extraordinary general meetings. In some cases, however, companies are required to hold a class meeting in which only one class of member is entitled to attend. To encourage institutional investors to engage more, the Financial Reporting Council (FRC) has published the UK Stewardship Code.

1. Introduction to company law

2018 ◽  
Author(s):  
Alan Dignam ◽  
John Lowry
Keyword(s):  
Company Law ◽  
Comparative Perspective ◽  
Organisational Structure ◽  
Private Companies ◽  
Public Companies ◽  
Business Organisation ◽  
The Core ◽  
The Subject ◽  
A Company

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter presents an overview of company law, first by considering the company’s place within the various forms of business organisation. To get some comparative perspective on the relative merits of each type of organisation, three criteria for judging them are discussed: whether the form of business organisation facilitates investment in the business, mitigates or minimises the risk involved in the business venture, and whether it provides a clear organisational structure. Using these criteria, three forms of business organisation are analysed: the sole trader, a partnership, or a registered company. The chapter also explains the importance of the memorandum as part of the company’s constitution, as well as the distinction between private companies and public companies. Finally, it outlines the benefits of forming a company as opposed to the sole trader or a partnership.

scholarly journals Regulatory Spillovers in Common Audit Markets

2020 ◽  
Vol 66 (8) ◽  
pp. 3389-3411 ◽  
Author(s):  
Raphael Duguay ◽  
Michael Minnis ◽  
Andrew Sutherland
Keyword(s):  
Nonprofit Organizations ◽  
Private Companies ◽  
Demand Shock ◽  
Financial Reports ◽  
Public Companies ◽  
Audit Market ◽  
Sarbanes Oxley ◽  
Long Run ◽  
Audit Fee ◽  
Short Run

We find that Sarbanes–Oxley (SOX) had two significant effects on the audit market for nonpublic entities. The first short-run effect stems from inelastic labor supply coupled with an audit demand shock from public companies. As a result, private companies reduced their use of attested financial reports in bank financing by 12%, and audit fee increases for nonprofit organizations (NPOs) more than doubled. The second long-run effect was a transformation in the audit supply structure. After SOX, NPOs were less likely to match with auditors most exposed to public companies, whereas auditors increasingly specialized their offices based on client type. Audit market concentration for NPOs dropped by more than one-half within five years of SOX and remained at this level through the end of our sample in 2013, whereas the number of suppliers increased by 26%. Our results demonstrate how regulation directed at public companies generates economically important spillovers for nonpublic entities. This paper was accepted by Suraj Srinivasan, accounting.

How Effective are Organizations' Internal Controls? Insights into Specific Internal Control Elements

2012 ◽  
Vol 6 (1) ◽  
pp. A31-A50 ◽  
Author(s):  
Dana R. Hermanson ◽  
Jason L. Smith ◽  
Nathaniel M. Stephens
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Financial Services ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Controls ◽  
Component Level ◽  
Public Companies ◽  
Tone At The Top ◽  
Survey Responses

SUMMARY Based on survey responses from approximately 500 Chief Audit Executives (CAEs) and other internal auditors, this article provides an insider's view of the perceived strength of organizations' internal controls (i.e., internal control over financial reporting) in the Control Environment, Risk Assessment, and Monitoring components of the Committee of Sponsoring Organizations' (COSO 1992a) Internal Control—Integrated Framework. Although the respondents largely rate control strength as relatively high, we identify several areas for potential improvement of internal controls, especially related to assessing the “tone at the top,” as well as following up on deviations from policy and management override of controls. In analyzing individual control elements, we find that public companies' controls are consistently rated as more effective than those of other organizations. We also find a number of interesting differences across key industries, especially in the Monitoring component, where banks and other financial services firms appear to have more robust Monitoring controls than do healthcare and other services firms. The component-level analysis reveals that internal control component strength is positively related to the CAE reporting primarily to the audit committee, public company status, and the average tenure of the internal audit function staff, among other findings. Based on the survey findings, we describe key implications relevant to internal and external auditors, accounting researchers and educators, and management.

scholarly journals Capital structure: Empirical evidences of public and non-public firms in Brazil

2015 ◽  
Vol 12 (3) ◽  
pp. 223-232
Author(s):  
Gabriel Hideo Sakai de Macedo ◽  
Joelson Oliveira Sampaio ◽  
Eduardo Flores ◽  
Pedro Luiz Aprigio
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Stock Exchange ◽  
Credit Market ◽  
Convertible Debt ◽  
Short Term ◽  
Private Companies ◽  
Public Companies ◽  
Public Firms

This study seek to contribute to the literature through research focused on companies listed and not listed on the stock exchange. A survey was used to identify the capital structure of Brazilian companies and relate the results to the Brazilian credit market. The results indicate that most of the investigated companies prefer not to issue convertible debt, as well as the share of firms issuing common shares was small. It was found that firms do not have preference between long-term and short-term debt. Finally, it was also noted that private companies have great concern about the volatility of earnings and cash flow. The differential of this research was to analyze the practices adopted by both public companies and privately held

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