When Cash Is Not King: An Examination of the Relative Effectiveness of Tangible vs. Cash Incentives on Whistleblower Reporting

We investigate the effects of incentive type (i.e., cash vs. tangible) in motivating whistleblower behavior. While prior research indicates that cash rewards are an effective means for motivating whistleblower reporting, research has yet to examine the relative effectiveness of tangible incentives (e.g., gift cards, incentive travel, and merchandise) in promoting these prosocial behaviors. Motivated by mental accounting theory, our study experimentally tests and finds that the type of reward offered (cash vs. tangible) interacts with reward size to predict whistleblower reporting behavior. Specifically, whistleblower reporting was less (more) sensitive to changes in reward size when small tangible (cash) rewards were offered. These findings suggest that tangible (i.e., non-cash) rewards can increase both the efficiency and effectiveness of whistleblower incentive programs and should be of considerable interest to managers, corporate boards, audit committees, and those charged with corporate governance.