An Examination of the Association

Between Gender and Reporting Intentions

for Fraudulent Financial Reporting

Steven KaplanKurt Pany

Janet SamuelsJian Zhang

ABSTRACT. We report the results of a study that

examines the association between gender and individuals’

intentions to report fraudulent financial reporting using

non-anonymous and anonymous reporting channels. In

our experimental study, we examine whether reporting

intentions in response to discovering a fraudulent financial

reporting act are associated with the participants’ gender,

the perpetrator’s gender, and/or the interaction between

the participants’ and perpetrator’s gender. We find that

female participants’ reporting intentions for an anony-

mous channel are higher than for male participants; the

fraud perpetrator’s gender and the interaction with par-

ticipants’ gender were not significantly associated with

anonymous channel reporting intentions. Neither of the

two factors nor the interaction between the two factors

was associated with reporting intentions to a non-

anonymous reporting channel. Results from an additional

analysis indicate that male and female participants differ in

the extent to which they judge the reduction in personal

costs of an anonymous reporting channel compared to a

non-anonymous reporting channel and that the reduction

in personal costs mediates the relationship between

participant gender and anonymous reporting intentions.

KEY WORDS: whistleblowing, gender, fraudulent

reporting, anonymous reporting channel,

non-anonymous reporting channel

Introduction

The 2006 Association of Certified Fraud Examiners’

Report to the Nation on Occupational Fraud and Abuse

(2006, p. 4) estimates that 5% of the annual revenues

of all United States organizations are lost to fraud.

Consistently, PricewaterhouseCooper’s fourth bien-

nial Global Economic Crime Survey (2007, p. 4) reveals

that fraud is a global concern in that for the 40

countries and 5,428 companies for which data was

obtained, over 44% reported one or more significant

economic crimes involving fraud during the pre-

ceding 2 years. Given the prevalence of fraud and its

impacts on many stakeholders (e.g., audit commit-

tees, internal auditors, external auditors, top manag-

ers, employees, creditors, and investors), many

companies rely on controls involving employees at all

levels reporting violations and wrongdoing such as

fraud (Nitsch et al., 2005).

The importance and role of employees reporting

fraud is further highlighted by recent evidence

showing that 20% of surveyed employees have

personal knowledge of workplace fraud (Slovin,

2006) and that the most common form of initial

fraud detection is from a tip, most frequently from a

company employee (Association of Certified Fraud

Examiners (ACFE), 2006). While this evidence

suggests that employees frequently report fraud that

they discover, it is generally believed that many

employees who discover fraud do not report it.

Accordingly, understanding individuals’ reporting

intentions upon the discovery of fraud represents an

important topic for fraud and whistleblowing

researchers as well as policy makers. Further, because

whistleblowing models (Miceli and Near, 1992;

Ponemon, 1994; Schultz et al., 1993; Smith et al.,

2001) generally include the type of wrongdoing as a

key variable affecting reporting intentions, it is

important to examine reporting intentions specifi-

cally in a fraud-related context. These models also

include attributes of the individual (e.g., gender) and

the reporting channel (e.g., anonymous versus non-

anonymous) as key variables influencing one’s

intentions to report organizational wrongdoing such

as fraud.

Journal of Business Ethics (2009) 87:15–30 � Springer 2008DOI 10.1007/s10551-008-9866-1

In an attempt to increase the reporting of fraud by

individuals, the Sarbanes-Oxley Act of 2002 (SOX)

directs audit committees of public companies to

establish and oversee procedures for anonymously

reporting fraud-related concerns (e.g., questionable

accounting, internal controls, or auditing matters;

Vera-Munoz, 2005). Relative to a non-anonymous

reporting channel, an anonymous reporting channel

is expected to increase individuals’ willingness to

report fraudulent financial reporting by decreasing

expected ‘‘personal costs’’ of reporting, including

potential retaliation, and other negative conse-

quences (Ayers and Kaplan, 2005; Kaplan and

Schultz, 2007; Moberly, 2006; Ponemon, 1994).

While companies covered by SOX are required

to have an anonymous reporting channel, these

companies will also implicitly or explicitly have non-

anonymous reporting channels. That is, employees

with fraud-related concerns always have the option

of reporting their concerns to an internal auditor or

other organizational representatives.1 Thus, when an

audit committee establishes an anonymous reporting

channel to satisfy its obligations under SOX, other

non-anonymous reporting channels such as to an

internal auditor remain in place and are not elimi-

nated. Further, regarding reporting channels, best

practices include the availability of a variety of

channels for employees to report their concerns

about illegal and unethical behavior (e.g., The

Network, 2006a, b).

However, research examining the extent to

which reporting intentions differ between an

anonymous and a non-anonymous reporting chan-

nel is limited (Kaplan and Schultz, 2007).

Further, previous research has not explicitly

focused on reporting fraud-related concerns, nor has

previous research explored the association between

the perpetrator’s and/or the individual’s gender and

reporting intentions under anonymous and non-

anonymous settings. Such evidence should be infor-

mative to audit committees, internal auditors, external

auditors, and policy makers who are interested in

understanding and increasing the willingness of indi-

viduals to report their fraud-related concerns. While

our results are not intended to form the basis for

different personnel moves (e.g., hiring decisions,

promotion decisions), information from our study

should provide interested parties with guidance on the

role and potential importance of gender in reporting

fraud-related concerns.

In this paper we report the results of a study

examining the association between both participant

gender and the fraud perpetrator’s gender and

reporting intentions to a non-anonymous reporting

channel (internal auditors) and to an anonymous

reporting channel (a telephone hotline) upon discov-

ery of a fraudulent financial reporting act. While pre-

vious research (discussed later) suggests that females

tend to be more ethical, the association between

gender and tendencies to report wrongdoing is

ambiguous. Also, since the available research is gen-

erally field- or survey-based, those studies are limited

in their ability to control for other potentially relevant

factors. Further, the available studies werenot designed

to examine the potential interaction between partici-

pant and perpetrator gender or to consider the context

of fraudulent financial reporting to an anonymous

reporting channel. Specifically examining reporting

intentions in a fraudulent financial reporting context is

especially important given the magnitude of the

problem, the apparent knowledge of these incidents

commonly held by employees, and recent regulations

(e.g., SOX) aimed, in part, to address this problem.

The participants in our experimental study were

evening MBA students who received background

information about a company and a single scenario

describing the discovery by an employee of a fraud-

ulent financial reporting act of another employee. The

fraudulent act specifically involved overstated asset

valuation, a frequent method of fraudulent financial

reporting (Association of Certified Fraud Examiners,

2006, pp. 19–23; Audit Analytics, 2008, p. 16). We

selected this act because of its frequency in practice

and because it has straightforward accounting effects

in that expenses were misrecorded as long-term assets.

Separate forms of the scenario manipulated the gender

of the employee engaging in fraudulent financial

reporting. In response, participants, assuming they

were facing the situation described in the scenario,

provided a response representing their intention to

report the act through (1) a non-anonymous reporting

channel and (2) an anonymous reporting channel. We

find that female participants are more likely to report

using an anonymous channel than are male partici-

pants, but that participant gender is not associated with

reporting intentions to the non-anonymous channel.

16 Steven Kaplan et al.

The gender of the perpetrator was not associated with

reporting intentions to either of the two reporting

channels.

In the next section of the paper we describe

research about gender – gender of the participant and

gender of the perpetrator – and the reporting of a

questionable act and develop three hypotheses. This

is followed by discussions of our research method and

results. The final section of the paper addresses the

study’s implications as well as its limitations.

Hypothesis development

In this study, we address the overall issue of whether

the gender of the participant and the perpetrator is

associated with participant reporting intentions for

fraudulent financial reporting relating to overstated

assets. Here, we develop three sets of hypotheses

about the gender of the participant and the fraud

perpetrator.

Participant gender

Researchers have a longstanding interest in under-

standing the extent to which judgments and behaviors

are linked to an individual’s gender. Under a gender

socialization perspective, females are theorized to be

more ethical in their judgments and behaviors than

males (Barnett and Karson, 1987; Collins, 2000;

Dobson and White, 1995; Gilligan, 1982; O’Fallon

and Butterfield, 2003; Vermeir and Van Kenhove,

2007). Consistent with this perspective, researchers

have found that females tend to reach more severe

ethical judgments than males (Beu et al., 2003;

Dawson, 1997; Harris and Sutton, 1995; Hoffman,

1998; Mason and Mudrack, 1996; Ritter, 2006; Smith

and Oakley, 1997). However, other studies do

not find an association between ethical judgments

and gender (Barnett and Karson, 1989; Coate and

Frey, 2000; Hegarty and Sims, 1979; Radtke, 2000;

Stanga and Turpen, 1991; Van Kenhove et al., 2001;

West et al., 2004). Hoffman (1998) contends that

these inconsistent findings suggest that ethical judg-

ments and ethically related behaviors are situation

specific.

When applied to the reporting of an employee’s

fraud-related concerns, the implications of the above

discussion are ambiguous. To the extent that females

reach more severe ethical judgments than males, one

might expect that females would be more likely than

males to report fraud-related concerns. Miethe and

Rothschild (1994) raise a consistent argument when

they contend that females are likely to report ques-

tionable or illegal acts more frequently than males

because females, on average, feel a greater public

responsibility to speak out against wrongdoing. As

they expected, Miethe and Rothschild found that in

their sample of whistleblowers (a large group col-

lected in various manners, including business

persons, nurses, and actual whistleblowers from a

variety of organizations) women were more likely

than men to report questionable acts using internal

reporting channels such as those included in our

study; alternatively they found that men were more

likely to report to external reporting channels.2

Consistently, Rothschild and Miethe (1999), again

using a sample composed of various whistleblowers

and employees, conclude that females are more

likely than males to use internal reporting channels.

However, to the extent that reporting question-

able or illegal behavior is considered risky (e.g.,

whistleblowers face possible retaliation and other

personal costs), some have argued that one might

expect that males would be more likely than females

to report questionable or illegal behavior such as

fraudulent financial reporting. Near and Miceli

(1985), characterizing whistleblowing as a form of

organizational dissidence, also speculate that men

might be more likely than women to report ques-

tionable acts. Their speculation was supported, in

part, by evidence showing that women tend to

conform to a majority opinion more than men, and

that the majority opinion may not be to report.

Subsequently, Miceli and Near and their co-authors

provide empirical evidence on this issue, finding that

males were more likely than females to report ques-

tionable acts (Miceli et al., 1991; Miceli and Near,

1988). Miceli et al. (1991) examine whether students

who have witnessed an apparent wrongdoing by a

research assistant indicate a willingness to report the

wrongdoing. The Miceli and Near (1988) study

focuses on the reporting behavior of employees of

the federal government.

In considering previous research findings showing

mixed results for the relation between gender and the

reporting of questionable behavior, it may be noted

17An Examination of the Association Between Gender and Reporting Intentions

that much of this research is field- or survey-based

(Mesmer-Magnus and Viswesvaran, 2005). While

these research methods have many advantages, they

may not be well suited to explore the relation

between gender and the reporting of fraudulent

accounting acts. Field studies and surveys of whis-

tleblowers are generally not able to control for all

potentially relevant factors such as the rank of the

participant, the organizational and ethical culture of

the organization, the opportunity for observing

wrongdoing, the severity of the wrongdoing, and the

available channels for reporting wrongdoing. Also,

previous research has not examined the role of the

perpetrator’s gender in the reporting of fraudulent

financial reporting.

In the current study, we use an experimental

approach to provide additional evidence on the rela-

tion between gender and the reporting of fraudulent

financial reporting. Using an experimental approach

allows us, with the exception of the manipulated

variable of interest, to hold constant the information

about the fraudulent financial reporting and the

related context in which it occurs. We examine

reporting intentions for both a non-anonymous and

an anonymous reporting channel. Generally, an

anonymous reporting channel, which is required for

public companies under Sarbanes-Oxley, is intended

to lower personal costs of reporting. Thus, reporting

under an anonymous reporting channel should lower

the risk of reporting. Based on the discussion above,

this feature might be especially important to females.

Accordingly, our first set of hypotheses:

Hypothesis 1a Under experimentally controlled con-

ditions, are males or females more likely to report

the discovery of fraudulent financial reporting

using a non-anonymous reporting channel?Hypothesis 1b Under experimentally controlled

conditions, are males or females more likely to

report the discovery of fraudulent financial

reporting using an anonymous reporting channel?

Perpetrator gender

Miceli and Near (1992) suggest that the gender of

the perpetrator may influence the likelihood of the

perpetrator’s wrongdoing being reported. They note

that this issue has received limited attention and call

for additional research on this topic. We are aware of

no subsequent research directly addressing whether

perpetrator gender influences reporting intentions.

However, prior research exploring issues related to

gender provide a basis to suggest a relation between

perpetrator gender and reporting intentions.

Researchers have explored gender bias in mana-

gerial settings (Biernat and Fuegen, 2001; Heilman,

2001; Hull and Umansky, 1997; Scott and Brown,

2006). For example, based on a consideration of

practitioner and academic evidence, Scott and Brown

(2006, p. 230), conclude that ‘‘As a whole, this work

suggests that a considerable amount of bias exists

against females.’’ Researchers have also suggested that

these differences may be due, in part, to gender trait

stereotypes, which focus on the psychological char-

acteristics or traits that individuals believe to be rep-

resentative of male and female managers (Heilman,

1995, 1997, 2001; Heilman et al., 1995; Owen and

Todor, 1994). In this regard, Heilman et al. (1995)

report that male managers are rated significantly more

favorably in terms of emotional stability, rationality,

and work competence compared to women manag-

ers. Heilman (2001) also suggests differences in how

success is attributed to male and female managers.

That is, favorable outcomes by a female manager are

more likely to be attributed to external factors (task

and/or luck), whereas favorable outcomes by a male

manager are more likely to be attributed to internal

factors (skill and effort).

In the current study, our focus is on a highly

unfavorable outcome, engaging in fraudulent finan-

cial reporting. To the extent that individuals are more

likely to attribute such behavior to internal factors

when the perpetrator is a female, reporting intentions

might be stronger when the perpetrator is a female

compared to a male. This discussion leads to the

following set of hypotheses:

Hypothesis 2a Under experimentally controlled

conditions, are individuals more likely to report

the discovery of fraudulent financial reporting

using a non-anonymous reporting channel when

the perpetrator is female?Hypothesis 2b Under experimentally controlled

conditions, are individuals more likely to report

the discovery of fraudulent financial reporting

using an anonymous reporting channel when the

perpetrator is female?

18 Steven Kaplan et al.

Research examining intergroup bias also provides a

basis for examining the joint influence of the indi-

vidual’s and perpetrator’s gender on one’s reporting

intentions. Intergroup bias refers to the systematic

tendency of one to evaluate one’s own membership

group (the in-group) or its members more favorably

than a non-membership group (the out-group) or its

members (Hewstone et al., 2002). In many areas,

research suggests that in-group member behavior is

evaluated more positively than the behavior of an

out-group member (e.g., Hewstone et al., 2002;

Schruijer et al., 1994).3 In addition, the effect of

intergroup bias ordinarily tends to be stronger for

negative actions. That is, the tendency to derogate

negative actions is stronger when performed by out-

group members compared to in-group members.

Research has been conducted on gender as an

in-group. It has been found to exist, with relatively

recent studies reporting that males are less likely than

females to show in-group bias (e.g., Nosek and Banaji,

2001; Richeson and Ambady, 2001; Rudman and

Goodwin, 2004). Reversals, however, of in-group

favoritism have been reported. When one seriously

violates the group norms, several studies report that the

in-group may assess this behavior even more harshly

than itwould that of a non-groupmember (Barry et al.,

2006; Begue, 2001; Mathews and Dietz-Uhler, 1998).

Based on intergroup bias research, we examine

whether participant gender and perpetrator gender

interact to shape one’s intentions to report fraudu-

lent financial reporting. This discussion leads to the

following set of hypotheses:

Hypothesis 3a Under experimentally controlled con-

ditions, are individuals’ intentions to report the

discovery of fraudulent financial reporting using a

non-anonymous reporting channel jointly influ-

enced by the participant’s and perpetrator’s gender?Hypothesis 3b Under experimentally controlled con-

ditions, are individuals’ intentions to report the

discovery of fraudulent financial reporting using an

anonymous reporting channel jointly influenced

by the participant’s and perpetrator’s gender?

Method

Below we discuss the design, participants, task, and

independent and dependent variables for the experi-

ment.

Design

The experiment utilizes a 2 9 2 analysis of variance

between-subjects design4 twice – once using non-

anonymous reporting intentions as the dependent

measure and once using anonymous reporting

intentions as the dependent measure. The design fully

crosses the measured independent variable of partici-

pant gender with the manipulated independent variable

of perpetrator gender. Hypotheses 1 and 2 are addressed

by the participant and perpetrator genders, respec-

tively. Hypothesis 3 is addressed by the interaction

between participant and perpetrator gender. In each

case, an ‘‘a’’ hypothesis relates to non-anonymous

reporting, while a ‘‘b’’ hypothesis to anonymous

reporting.

Participants

Participants were evening MBA students from a

major university.5 One-hundred eighteen partici-

pants completed the instrument. Five participants

who failed the manipulation check (as discussed

further in the ‘‘Results’’ section) were removed,

leaving 113 participants for the analysis for the

anonymous telephone hotline channel; two partici-

pants did not reply as to the non-anonymous internal

auditor channel, leaving 111 participants for that

portion of the analysis. As indicated in Table I, our

participants had an average age of over 29 and 70%

were male. They averaged over 7½ years of work

experience and, on average, were employees with

large firms (mean over 37,000 employees). Finally,

45% of the participants reported that they had dis-

covered a person of greater authority engaging in a

questionable or wrongful behavior. Neither analysis

of variance (applied to age, years of work experience,

number of employees in company) nor a chi square

analysis (applied to whether the individual had dis-

covered questionable or wrongful behavior) revealed

any statistically significant differences among the

groups.

Task

Participants were given an experimental instru-

ment describing a hypothetical manufacturer of

19An Examination of the Association Between Gender and Reporting Intentions

consumable materials. They were then informed that

the company, APEX, Inc., had established two

channels for reporting suspected illegal practices or

instances of questionable behavior: non-anonymous

reporting to the internal audit department and an

anonymous telephone hotline. Following this was

background information about the company indi-

cating that top management has been pressuring the

division, and others, to report increased earnings for

the year so that the company can meet financial

analysts’ forecasts of earnings per share.

Further, the instrument summarized the perpe-

trator’s inappropriate act (e.g., fraudulent financial

reporting involving overstated assets) and manipu-

lated the gender of the perpetrator. In response to

the scenario, participants were asked to provide their

intentions to report the fraudulent act using each of

the two channels. After providing these reporting

intentions, participants responded to a series of

statements about participants’ perceptions of the

fraudulent act, personal costs and responsibilities of

the employee to report the fraudulent act, and

organizational responses if the fraudulent act is

reported. Finally, participants answered a manipu-

lation check question and provided information

about their gender and backgrounds.

Nature of the fraudulent act

We chose a fraudulent financial reporting act to in-

clude in the case due to the large organizational and

societal costs of such acts and because the Sarbanes-

Oxley Act requiring audit committees to establish an

anonymous reporting system is intended to increase

employees’ reporting of fraudulent financial report-

ing. The fraudulent act specifically involved improper

asset valuation, a frequent method of fraudulent

financial reporting (Association of Certified Fraud

Examiners, 2006, p. 16). In this case, a divisional

financial accountant discovered that $800,000 of

expenses had been capitalized by his supervisor, the

controller of the division, a ‘‘very skilled CPA.’’ The

misrecording increased earnings per share by $0.02,

which exactly met financial analysts’ expectations.

In considering the description of the act, two fea-

tures are worth noting. First, the case, by design, left

little room for doubt regarding whether a fraudulent

act had occurred or not. The case was so designed in

order to explicitly focus on a clear-cut case of fraud-

ulent financial reporting. Such a clear-cut case of fraud

was needed, we believed, to tie back to and represent

an appropriate test of our hypotheses. That is, each of

our hypotheses is in the context of the ‘‘discovery of

fraudulent financial reporting’’ rather than ‘‘the pos-

sibility of fraudulent financial reporting.’’ Secondly,

the case involved what we judged to be a ‘‘significant’’

incident of fraudulent financial reporting. That is, we

designed the case so that participants would be

unlikely to infer that the incident was ‘‘immaterial’’

and, consequently, believe that there was no need for

the incident to be reported.

Independent variables

Participant gender

After completing the case, as part of the demo-

graphic questions, participants indicated their gender

(male or female). Thus, participant gender is a

measured variable.

Gender of perpetrator

The study manipulated the gender of the perpetra-

tor, the controller of the division. In the case, the

controller was identified multiple times as either

TABLE I

Demographic information

Total (n = 113)

Age

Mean 29.3

SD 4.6

Gender (%)

Female 30

Male 70

Years of work experience

Mean 7.6

SD 4.6

Number of employees in company

Mean 37,316

SD 67,787

Have you discovered a person of

greater authority engaging in

questionable or wrongful behavior? (%)

Yes 45

No 55

20 Steven Kaplan et al.

John (male) or Jane (female). The gender of the

perpetrator is a between-subjects variable.

Dependent measures

Participants provided intentions to report the fraud-

ulent act via two reporting channels: a non-anony-

mous and an anonymous reporting channel.6 The

non-anonymous reporting channel involved report-

ing to the internal audit department. The internal

audit department was selected as the non-anonymous

reporting channel because these employees ordinarily

have responsibilities for preventing and detecting

fraudulent acts. Also, Read and Rama (2003, p. 354)

contend that ‘‘internal auditors are natural outlets for

whistle-blowers.’’ The case, in part, described the

internal audit department’s responsibilities to inves-

tigate suspected illegal practices or instances of

questionable behavior.

The anonymous reporting channel involved

reporting via a telephone hotline. As discussed above,

audit committees of public companies are required to

establish and maintain systems allowing employees to

anonymously report fraudulent financial reporting

acts. A telephone hotline satisfies this requirement.

The case, in part, described the hotline as being

administered by an independent company paid by the

company. We chose to have an independent com-

pany administer the anonymous hotline as this is

considered to be a best practice (Association of

Certified Fraud Examiners, 2005; Global Compli-

ance, 2007; The Network, 2006a, b). In this regard,

the Association of Certified Fraud Examiners (2005,

p. 54), as well third party providers of anonymous

reporting hotlines (e.g., Global Compliance, 2007;

The Network, 2006a, b), suggests that an indepen-

dently operated system is preferable because it

generally provides for highly qualified and trained

personnel answering calls.7 Although administered

by an independent company, the anonymous

reporting channel also is considered to be an internal

channel. This is because the independent company

was hired by and under the authority and control

of APEX, Inc. Further, the case indicated that any

reports received by the hotline were forwarded to

APEX, Inc. (e.g., internal audit and the audit com-

mittee). Thus, information received by hotline was

kept internally within APEX, Inc. In the research

instrument itself, participants then responded to the

following two questions:

Given this situation, how likely is it that you

would report this instance of questionable behavior

to:

The internal auditing department:

Extremely Unlikely 1 . . . 2 . . . 3 . . . 4 . . . 5 . . . 6 . . . 7

Extremely Likely

Anonymous reporting hotline:

Extremely Unlikely 1 . . . 2 . . . 3 . . . 4 . . . 5 . . . 6 . . . 7

Extremely Likely

Responses to the first measure are referred to as the

non-anonymous reporting intention and responses

to the second measure are referred to as the anony-

mous reporting intention. These dependent mea-

sures are similar to previous research (Ayers and

Kaplan, 2005; Chiu, 2003; Kaplan and Whitecotton,

2001; Schultz et al., 1993; Singer et al., 1998).

Results

Manipulation check

We included a manipulation check question to

determine whether participants attended to whether

the perpetrator’s name was ‘‘John’’ or ‘‘Jane.’’ As

indicated previously, five participants incorrectly

answered the manipulation check and were dropped

from the statistical analysis. However, our results are

qualitatively similar when responses from all partic-

ipants are analyzed.

Tests of hypotheses

Analysis of variance (ANOVA) is used for testing the

three hypotheses. With respect to the analyses for each

hypothesis, participant gender and perpetrator gender

are the independent variables. Also, depending on the

hypothesis, the dependent measure is either intention

to report using the non-anonymous reporting channel

(the internal audit department) or intention to report

using the anonymous reporting channel (the tele-

phone hotline). Statistical results using non-anony-

mous reporting intention as the dependent measure

21An Examination of the Association Between Gender and Reporting Intentions

are presented in Table II (Panel A) and descriptive

statistics presented in Table II (Panel B). Table III

(Panels A and B) presents the statistical results and

descriptive statistics, respectively, using the anony-

mous reporting intention as the dependent measure.

Hypotheses 1a, 2a, and 3a address whether the

participant’s gender, the perpetrator’s gender, or the

interaction between the two is significantly associ-

ated with non-anonymous reporting intentions. As

shown in Table II (Panel A), neither of the two

main effects nor the interaction term is significantly

associated with non-anonymous reporting inten-

tions. Further, as shown in Table II (Panel B), the

cell means are all below the scale mid-point of 4,

suggesting that on average participants generally

would not report the fraudulent act to the internal

audit department.

Hypotheses 1b, 2b, and 3b address whether the

participant’s gender, the perpetrator’s gender, or the

interaction between the two are significantly asso-

ciated with anonymous reporting intentions. As

shown in Table III (Panel B), mean anonymous

reporting intentions for each cell are above the scale

mid-point of 4, suggesting that on average partici-

pants are likely to report the fraudulent act using an

anonymous telephone hotline. Further, as shown in

Table III (Panel A), participant gender is signifi-

cantly associated with anonymous reporting inten-

tions. The mean for anonymous reporting intention

for female participants (6.15) is higher than mean

anonymous reporting intention for male participants

(5.28). Table III (Panel A) also shows that partici-

pant gender and perpetrator gender are not inter-

actively associated with anonymous reporting

intention.

Additional analysis

Our research instrument also included a series of

statements about participants’ perceptions of the

fraudulent act, personal costs, and responsibilities of

the employee to report the fraudulent act, and

organizational responses if the fraudulent act is

TABLE II

Analysis of non-anonymous reporting intention

Panel A: ANOVA using non-anonymous reporting intention as the dependent variablea

Source Mean square F-value p-valueb

Participant genderc (H1a) 2.70 0.68 0.412

Perpetrator genderd (H2a) 3.33 0.84 0.363

Participant gender * perpetrator gender (H3a) 0.28 0.07 0.792

Error 3.98

Panel B: Means (standard deviations) of non-anonymous reporting intentiona

Participant genderc Perpetrator genderd Total

Female Male

Female 3.74 (1.70) 3.46 (2.03) 3.63 (1.81)

Male 3.50 (2.24) 3.00 (1.89) 3.23 (2.06)

Total 3.58 (2.05) 3.11 (1.91) 3.34 (1.99)

aParticipants were asked ‘‘Given this situation, how likely is it that you would report this instance of questionable behavior

to the reporting hotline (anonymously).’’ They provided their assessment using a 7-point scale with the endpoint of one

labeled ‘‘Extremely Unlikely’’ and seven was labeled ‘‘Extremely Likely.’’bReported p-values are two-sided.cParticipant gender was a measured variable based on the participants’ response as to their gender.dPerpetrator gender was a manipulated variable. In the case, information about the perpetrator of the fraudulent act

indicated that the perpetrator was either male or female.

22 Steven Kaplan et al.

reported. These statements represent factors that

previous research has identified as influencing

employees’ reporting of questionable/unethical

organizational behavior (Miceli and Near, 1992;

Ponemon, 1994; Schultz et al., 1993; Smith et al.,

2001). We analyzed responses to these statements to

help us obtain a better understanding of the reporting

intention results discussed above. For each statement,

Table IV presents the mean responses by participant

gender. The first four statements related to percep-

tions of the fraudulent act. Mean responses for these

four statements indicate that consistent with our

expectations, the act was generally considered to be a

‘‘material’’ or ‘‘significant’’ incident. That is, the

means generally indicated that the fraudulent act was

morally wrong, serious, unethical (general consen-

sus), and unfair.

Also as shown, the mean responses for only two of

the statements differed significantly (p < 0.05) across

participant gender. First, male participants indicated

stronger agreement with the statement that the act is

morally wrong. That is, on a scale with lower

numbers indicating stronger agreement, the mean

among males is 2.77 compared to a mean among

females of 4.09. This is a surprising finding, since

previous research generally shows that females are

inclined to rate a situation as less ethical as compared

to males (e.g., Harris and Sutton, 1995; Rawwas,

1996; Vermeir and Van Kenhove, 2007). However,

the analysis for item numbers 2–4 also shows no

significant differences related to other ethically

related perceptions of the fraudulent act. Thus, while

female participants on average did not feel as strongly

that the act was morally wrong, they acknowledged

to the same extent as male participants that there is

general consensus that the act was unethical and

serious.8 In further analysis, we included this variable

as a covariate to the analyses of anonymous reporting

intention reported above. The significant results for

participant gender do not change.

Table IV also shows that male and female partici-

pants’ mean responses to item number 5 differed

significantly. Females judged the personal cost of

reporting to internal auditors, the non-anonymous

TABLE III

Analysis of anonymous reporting intention

Panel A: ANOVA using anonymous reporting intention as the dependent variablea

Source Mean square F-value p-valueb

Participant genderc (H1b) 16.52 4.978 0.028

Perpetrator genderd (H2b) 1.10 0.33 0.566

Participant gender * perpetrator gender (H3b) 6.45 1.94 0.166

Error 3.32

Panel B: Means (standard deviations) of anonymous reporting intentiona

Participant genderc Perpetrator genderd Total

Female Male

Female 6.47 (1.02) 5.73 (1.67) 6.15 (1.37)

Male 5.11 (2.08) 5.42 (1.91) 5.28 (1.98)

Total 5.58 (1.89) 5.50 (1.84) 5.54 (1.86)

aParticipants were asked ‘‘Given this situation, how likely is it that you would report this instance of questionable behavior

to the reporting hotline (anonymously).’’ They provided their assessment using a seven-point scale with the endpoint of

one labeled ‘‘Extremely Unlikely’’ and seven was labeled ‘‘Extremely Likely.’’bReported p-values are two-sided. Significant p-values are in bold.cParticipant gender was a measured variable based on the participants’ response as to their gender.dPerpetrator gender was a manipulated variable. In the case, information about the perpetrator of the fraudulent act

indicated that the perpetrator was either male or female.

23An Examination of the Association Between Gender and Reporting Intentions

reporting channel, as higher than males (8.29 vs. 7.38).

This suggests that females, who on average judge the

personal costs of reporting non-anonymously to be

greater than males, may be especially receptive to

using an anonymous reporting channel. That is, per-

ceptions of the personal costs of reporting to internal

auditors may mediate the relationship between gender

and anonymous reporting. Baron and Kenny (1986, p.

1178) contend that it is important to examine medi-

ating variables because they increase our understand-

ing of the process by which individuals ‘‘transform the

predictor or input variables.’’

Baron and Kenny (1986) detail the steps to identify

a mediator variable. First, as shown in Table IV, the

variable, personal cost of reporting to internal audi-

tors, has to differ between genders. Second, the

variable has to be significantly associated with the

dependent measure, anonymous reporting intentions.

The two variables are not significantly associated

(r = 0.11, p < 0.27); thus, personal cost of reporting

to internal auditors is not a mediator variable.

Further, to explore the role of personal costs, we

created a new variable, the difference between per-

sonal costs of reporting to internal auditors and the

personal costs of reporting to the hotline (e.g., items 5

and 6 shown in Table IV). This measure is referred to

as the personal cost difference. This measure is

intended to capture the incremental aspect implicitly

behind the anonymous reporting requirements

related to SOX. That is, the implicit assumption of

requiring an anonymous reporting channel is that it

would lower personal costs from those of a non-anony-

mous reporting channel such that employees would be

more likely to report their fraud-related concerns.

Increasingly large positive personal cost difference

scores reflect an increasingly greater reduction in the

perceived costs of reporting to the hotline relative to

the internal auditor. Consistent with the implicit

assumption of the effect of relative changes in personal

costs influencing anonymous reporting intentions, the

personal cost difference score is significantly associated

(r = 0.39, p < 0.01) with anonymous reporting

intentions. That is, reporting intentions to the hotline

were increasingly stronger as the relative personal costs

of anonymous reporting increasingly declined.

Given its significant association with anonymous

reporting, we consider whether personal cost

difference scores mediate the relationship between

participant gender, the independent variable, and

anonymous reporting intentions, the dependent

variable. Identifying a mediator variable involves two

additional steps beyond: (1) finding a significant

association between participant gender and anony-

mous reporting intentions and (2) finding a significant

association between the potential mediator and the

dependent measure (Baron and Kenny, 1986). First,

the independent variable must be significantly asso-

ciated with the potential mediator. This condition is

satisfied, as the mean personal cost difference score for

male participants (X = 2.7) is significantly smaller

TABLE IV

Means (standard deviations) of attitude questions by participant gender

Attitude questionsa Female participants Male participants Significance levelb

1. Act is morally wrong 4.09 (3.23) 2.77 (2.44) 0.020

2. Act seriousness 8.03 (1.09) 7.59 (1.65) 0.163

3. Act is unethical (general consensus) 7.32 (1.67) 7.15 (1.72) 0.629

4. Act fairness 3.74 (2.15) 3.71 (1.91) 0.948

5. Personal cost of reporting via internal auditors 8.29 (.96) 7.38 (1.85) 0.007

6. Personal cost of reporting via reporting hotline 4.21 (2.27) 4.72 (2.22) 0.263

7. Responsibility to inform 8.03 (1.55) 7.47 (1.66) 0.096

8. Company will thoroughly investigate 7.03 (1.57) 6.53 (1.90) 0.182

9. Corrective actions will be taken 6.56 (1.96) 6.25 (2.02) 0.457

aParticipants provided their assessment using a 9-point scale. Questions were labeled at the 1 and 9 endpoints as follows:

question 1, strongly agree/strongly disagree; questions 2, 5, 6, and 7, very low/very high; question 3, very unlikely/very

likely; question 4, very unfair/very fair; questions 8 and 9, strongly disagree/strongly agree.bReported p-values are two-sided. Significant p-values are in bold.

24 Steven Kaplan et al.

(F = 6.3, p < 0.02) than for female participants

(X = 4.1). Second, when the potential mediator

variable is added to the previous model of anonymous

reporting intentions, the significance of participant

gender either is eliminated or substantially reduced.

The results for this model including both the personal

difference score and participant gender are presented

in Table V. As shown, the personal cost difference

score remains highly significant but participant gen-

der is no longer significant. Thus, the last condition

for a mediator is satisfied. Overall, the results of this

analysis indicate that differences in perceived costs

between reporting to internal auditors and an anon-

ymous reporting hotline mediate the relationship

between participant gender and anonymous report-

ing intentions.

Discussion

This study provides evidence on the interrelated

issues of gender as it relates to the reporting of

fraudulent acts using internal reporting channels.

Understanding the extent to which individuals are

willing to internally report fraudulent financial

reporting acts is important because employees com-

monly are the first to discover wrongdoing such as

fraudulent financial reporting. Thus, if individuals

report, organizations have the opportunity to detect

the fraudulent act as early as possible, limiting the

negative consequences. Further, if it becomes well

known that individuals are willing to report wrong-

doing, this may also serve a preventive function and

discourage some from engaging in fraudulent finan-

cial reporting. Both these dimensions, the prevention

and early detection of fraud, relate directly to the

operating effectiveness of controls, which is of

particular concern for audit committees, internal

auditors, external auditors, and policy makers. In this

regard, internal and external auditors, who have a

responsibility to monitor and assess the firm’s control

environment, have an interest in understanding the

factors contributing to individuals’ intentions to

communicate knowledge of fraudulent acts. Con-

gress, who passed the Sarbanes-Oxley Act of 2002

requiring audit committees of public companies to

establish and oversee procedures for anonymously

reporting fraud-related concerns, also has an interest

in judging the benefits of this requirement. While

prior research has examined gender of whistleblow-

ers, this is the first study of which we are aware that

simultaneously considers gender both in terms of the

individual reporting the fraudulent financial act and

the gender of the act’s perpetrator.

Our findings indicate that females’ reporting

intentions for an anonymous reporting channel are

significantly higher than males’ reporting intentions.

This result is consistent with the findings of Miethe

and Rothschild (1994) and Rothschild and Miethe

(1999). Our results, however, reinforce and extend

TABLE V

Analysis of covariance results for anonymous reporting intentionsa

Source Mean square F-value p-valueb

Participant genderc 5.76 1.956 0.165

Perpetrator genderd 1.88 0.639 0.426

Participant gender * perpetrator gender 4.142 1.407 0.238

Personal cost difference scoree 43.814 14.886 0.001

Error 2.943

aParticipants were asked ‘‘Given this situation, how likely is it that you would report this instance of questionable behavior

to the reporting hotline (anonymously).’’ They provided their assessment using a 7-point scale with the endpoint of 1

labeled ‘‘Extremely Unlikely’’ and 7 was labeled ‘‘Extremely Likely.’’bReported p-values are two-sided. Significant p-values are in bold.cParticipant gender was a measured variable based on the participants’ response as to their gender.dPerpetrator gender was a manipulated variable. In the case, information about the perpetrator of the fraudulent act

indicated that the perpetrator was either male or female.eThe personal cost difference score is a measured variable and is the difference between personal costs of reporting to

internal auditors and the personal costs of reporting to the hotline (e.g., items 5 and 6 shown in Table IV).

25An Examination of the Association Between Gender and Reporting Intentions

previous research in two important ways. First, our

results reinforce previous research through our

findings that gender significantly influences report-

ing intentions for one (e.g., anonymous) reporting

channel but not the other (e.g., non-anonymous)

reporting channel. Apparently, gender and what

drives gender effects do not manifest in every

judgment or decision-making setting. We believe

that a key challenge and direction for further gender-

related research, as it relates to whistleblowing or

other key organizational decisions, is to offer insight

and understanding into when and why gender dif-

ferences in judgments occur. Secondly, our results,

through our mediation analysis, do provide insight

on why females’ reporting intentions for an anony-

mous reporting channel are greater than those of

males. Specifically, our results show that male and

female participants differ in the extent to which they

judge the reduction in personal costs of an anony-

mous reporting channel compared to a non-anon-

ymous reporting channel and that this difference in

personal costs mediates the relationship between

one’s gender and anonymous reporting intentions.

Our findings also indicate a significant association

between the personal cost difference score (e.g., the

extent to which perceived personal costs of reporting

are lower for the anonymous reporting channel

relative to those of the non-anonymous reporting

channel) and anonymous reporting intentions. This

finding is important in that it represents initial

evidence consistent with an implicit assumption

mandating public companies to make an anonymous

reporting channel available to employees to report

fraud-related concerns. That is, our results show that

relative decreases in the perceived personal costs to

report result in stronger reporting intentions for

fraudulent financial reporting. Consistent with per-

sonal costs being perceived as lower for anonymous

reporting, we also found that reporting intentions

were higher for the anonymous reporting channel

compared to the non-anonymous reporting channel.

This finding, while perhaps not surprising, provides

further support that the availability of an anonymous

reporting channel increases individuals’ reporting

intentions for fraudulent financial reporting.

These findings have implications for those who

need to assess a company’s internal control and con-

tribute to the literature by providing evidence from a

controlled setting involving fraudulent financial

reporting. Generally, earlier studies dealt with sam-

ples of actual whistleblowers who had reported a

variety of questionable acts in various settings. Our

results are not consistent with research that suggests

that women are more reticent than men to report

ethics violations (e.g., Miceli et al., 1991; Miceli and

Near, 1988). However, we do find evidence that

gender is associated with personal cost differences,

that personal cost difference is significantly associated

with anonymous reporting intentions, and that these

personal cost differences mediate the relationship

between gender and anonymous reporting inten-

tions. These findings suggest that increasing the per-

ceived personal cost difference between reporting

non-anonymously to internal auditors and reporting

anonymously via a reporting hotline may increase

anonymous hotline reporting. This may be able to be

achieved by reducing the perceived personal cost of

anonymous hotline reporting. Even though it was

anonymous, female and male participants, on average,

reported a personal cost of reporting via a hotline of

4.21 and 4.72, respectively, on a scale were 1 was very

low personal cost and 9 was very high personal cost.

While these perceived personal costs of reporting

were significantly below the perceived costs of non-

anonymous reporting, they were higher than one

might expect. The anonymous reporting channel was

administered by an independent third party provide

hired by APEX, which was described in part as being

selected ‘‘because of its strong reputation for pro-

tecting the privacy of individuals filing a report.’’ Our

findings suggest that while an independently admin-

istered anonymous hotline is helpful in lowering

perceived personal costs, some level of skepticism

apparently remains. This suggests that future research

should explore potential mechanisms or steps that

might be taken by companies to further reduce

individuals’ perceived personal costs of an anony-

mous hotline reporting.

Our findings that reporting intentions are not

significantly influenced by the gender of the perpe-

trator may be reassuring to those involved with

designing and evaluating internal controls. We find

that neither a male nor female perpetrator has a

comparative advantage with respect to reporting by

others. That is, participants in our study were equally

likely to report their knowledge that a fraudulent

financial reporting act has been committed, which

suggests that gender bias is not present when it comes

26 Steven Kaplan et al.

to the reporting of fraudulent financial reporting in

organizational settings (e.g., Biernat and Fuegan,

2001; Heilman, 1995, 1997, 2001). In summary, we

find that the gender of the perpetrator is not associ-

ated with individuals’ reporting intentions to either a

non-anonymous or anonymous reporting channel.

However, our evidence indicates that females are

more likely than males to report fraudulent financial

reporting to an anonymous reporting channel.

However, gender is not associated with individuals’

non-anonymous reporting intentions.

The results of this study must be viewed in light

of its limitations. First, an experimental approach in

which participants respond to a hypothetical inci-

dent is not the same as discovering a fraudulent act in

their actual work environment. For example, the

limited information in the case may cause differing

results than would be obtained in a real world

environment. Also, factors such as fear and anger,

that may play a part in actual setting, are likely to

play a diminished role in an experimental setting

(Curtis, 2006). However, Miceli and Near (1984)

advocate the use of experimental approaches as a

complement to survey and archival approaches.

Previous research (Ayers and Kaplan, 2005; Kaplan

and Schultz, 2007; King, 1997; Schultz et al., 1993)

has used experimental methods to explore reporting

intentions for wrongful acts within an organizational

setting. An experimental approach is particularly

well suited to the current study where the focus is on

understanding potential differences in reporting

intentions across two important factors. In this

regard, an experimental approach with carefully

constructed cases strengthens internal validity.

A second limitation relates to our participants,

evening MBAs. Yet, these students are working

professionals with a wide variety of work experiences

who may confront questionable and/or wrongful

behavior in their work environment. Indeed, Table I

reveals that 45% of the participants had discovered a

person of greater authority engaging in questionable

or wrongful behavior. While we believe our partici-

pants are representative of employees who might

discover a fraudulent act at work, we have no direct

evidence to support this.

Third, our study relied upon only one scenario to

represent fraudulent financial reporting. We selected

a ‘‘common’’ or ‘‘typical’’ example of such an act

and held constant other features about the fraud, but

it may be the case that reporting intentions are

sensitive to amounts involved and/or the particular

nature of the fraudulent act. Finally, our study only

incorporated one anonymous (e.g., independently

administered hotline) and one non-anonymous (e.g.,

internal auditor) reporting channel. Other forms of

anonymous reporting channels (e.g., telephone

hotline administered by company personnel) as well

as non-anonymous reporting channels (e.g., one’s

supervisor or supervisor’s supervisor) may also exist

and should be examined by further research.

Notes

1 The New York Stock Exchange requires companies

listed on their exchange to have an internal audit func-

tion. While other exchanges do not have this require-

ment, it is generally believed that most publicly traded

companies have an internal audit function (Bailey et al.,

2003).2 An internal reporting channel involves reporting

directly to an individual(s) within the organization, or

to an ethics hotline provider engaged by the company.

External hotlines involve reporting to external parties

such as regulatory agencies, news sources.3 This research evolved from Social Identity Theory as

originally posted by Tajfel and Turner (1979).4 We also manipulated the interpersonal closeness

between the perpetrator and the participant. Those re-

sults, available from the authors, show that the main ef-

fect for interpersonal closeness and the related

interactions effects are insignificant. Results for partici-

pant and perpetrator gender are essentially the same with

or without the closeness factor in the model. We suspect

our results for interpersonal closeness reflect the diffi-

culty of experimentally capturing the richness of inter-

personal relationships.5 Recent studies have used MBA students to examine

reporting intentions for questionable acts. Kaplan and

Schultz (2007) used evening MBA students as partici-

pants in their study examining the use of an anonymous

reporting channel to report questionable events. Ayers

and Kaplan (2005) used day MBA students to address

employee reporting intentions relating to wrongdoing

by consultants.6 After providing non-anonymous and anonymous

reporting intentions about themselves, participants were

also asked to provide non-anonymous and anonymous

reporting intentions with regard to their peers. Those

results, available from the authors, were statistically insig-

nificant. However, to evaluate potential social desirability

27An Examination of the Association Between Gender and Reporting Intentions

effects we included the appropriate peer reporting

measure as a covariate in models of non-anonymous and

anonymous reporting intentions. In each model, the peer

measure is significant, and the results for the other

variables remain unchanged.7 Generally, an ‘‘external’’ reporting channel refers to

one that is completely independent and outside the

authority and control of the organization (e.g., media

and/or regulators; Miceli and Near, 1992).8 Because the additional case question on whether the

questionable act was morally wrong asked for the par-

ticipant’s own beliefs, and because the question on its

ethicality dealt with the participant’s view of the general

consensus among people, the higher means relating to

the act being morally wrong may not be surprising.

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Steve Kaplan and Kurt Pany

W. P. Carey School of Business,

Arizona State University, Tempe,

AZ, U.S.A.

E-mail: steve.kaplan@asu.edu

Janet Samuels

School of Global Management and Leadership,

Arizona State University, Glendale, AZ, U.S.A.

Jian Zhang

College of Business,

San Jose State University,

San Jose, CA, U.S.A.

30 Steven Kaplan et al.