In our paper, Whistle-Blowing: Target Firm Characteristics and Economic Consequences, which is forthcoming in The Accounting Review, we document the first systematic evidence on the characteristics and economic consequences of firms subject to employee allegations of corporate financial misdeeds. Whistle-blowing has received considerable attention in recent years after (1) whistleblowers were responsible, in part, for revealing the accounting scandals at Enron and WorldCom, and (2) provisions in SOX were enacted to protect employee whistle-blowers. Still, little is known about the nature of firms that are subject to whistle-blowing and whether such allegations are economically significant events with meaningful consequences for the targeted firms. Unlike other research to date, our focus is on (1) characteristics of firms targeted by employee whistleblowers, (2) the economic consequences of such whistle-blowing revelations and (3) firm responses to such allegations via subsequent governance changes.

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