Whistleblowing in India: evidence from accounting students and professionals

• Pages: 126-146
• DOI: https://doi.org/10.1108/IJAIM-01-2019-0001
• Published date: 28 January 2020
• Date: 28 January 2020
• Author: Richard G. Brody,Gaurav Gupta,Todd White
• Subject Matter: Accounting methods/systems,Accounting & Finance

Whistleblowing in India: evidence

from accounting students

and professionals

Richard G. Brody

Department of Accounting, Anderson School of Management,

University of New Mexico, Albuquerque, New Mexico, USA

Gaurav Gupta

Department of Accountancy and Business Law, Cameron School of Business,

University of North Carolina Wilmington, Wilmington, North Carolina, USA, and

Todd White

Department of Accounting, Anderson School of Management,

University of New Mexico, Albuquerque, New Mexico, USA

Abstract

Purpose –The purpose of this paper is to examine whistleblowing behavior in the accounting community

(studentsand professionals) in an emerging economy –India.

Design/methodology/approach –Using a case-based approach, data were collected from 263

accountingstudents and 268 accounting professionals in India.

Findings –Using multivariate and univariate analyses of variance and logistic regressions, the authors

provided evidence on how accounting students and professionals behave in a whistleblowing environment.

Specif‌ically, the authors found mixed results when comparing the behavior of accounting students and

professionals in a whistleblowing scenario. All subjects ref‌lected a more collectivist attitude, although

professionalswere more concerned about “f‌ixing”the identif‌iedinternal control problem (a “shared”problem).

Both groups expresseda f‌irm desire to collect more evidence against the likely fraudster.

Practical implications –In this era of global offshoring of services including accounting, the current

study makes signif‌icant contributions to the accounting ethics literature and the accounting profession by

analyzing whistleblowing behavior from an Indian perspective –a highly underrepresented area in the

accounting ethics literature.The study aims to guide companies and investorsin the US and elsewhere that

do business in India.

Originality/value –While the accounting literature has plenty of research on whistleblowing in the

Western world, there is a dearth of literature on whistleblowing in India. This paper is among the f‌irst to

document whistleblowing behavior in India, a countrythat prides itself on its vast availability of English-

speakingand technically sound accounting professionals.

Keywords India, Culture, Ethics, Offshoring, Fraud, Whistleblowing

Paper type Research paper

Introduction

Whistleblowing activityhas been increasing since the 2008-2009 f‌inancial crisis.As of 2015,

the number of tips received by the Securities and Exchange Commission’s whistleblower

off‌ice already reached nearly4,000 per year (The Economist, 2015). Whistleblowers continue

to come forward and expose wrongdoing both in the US and abroad. In New York,a former

employee of celebrity tailor Mohanbhai Ramchandani was awarded US$1.1m for blowing

IJAIM

28,1

126

Received8 January 2019

Revised1 February 2019

Accepted2 February 2019

InternationalJournal of

Accounting& Information

Management

Vol.28 No. 1, 2020

pp. 126-146

© Emerald Publishing Limited

1834-7649

DOI 10.1108/IJAIM-01-2019-0001

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1834-7649.htm

the whistle on Ramchandani who underreported millions of dollars of income and sales

taxes (Verschoor, 2013). Internationally, Volkswagen is dealing with two devastating

emissions scandals and is belatedly embracing whistleblowers (The Economist, 2015).

Whistleblowers inemerging economies such as India are also exposing fraudulentpractices.

Dinesh Thakur blew the whistle on the Indian drug company Ranbaxy for submitting

fraudulent data to US regulators, making false statements and selling drugs not

manufactured in compliance with FDA regulations (New Internationalist, 2014).

Whistleblowing is vital in exposingfraud and corruption and has been found to be 13 times

more effective at detectingfraud than external auditors (Weirich and Harrast, 2011).

However, facilitating whistleblowing behavior can be diff‌icult because of the severe

threat of retaliation whistleblowersface. For example, Paul Moore who blew the whistle on

the British bank HBOS in 2004 has since battled depression and alcoholism. He reluctantly

admits that he would not have had the courage to becomea whistleblower if he had known

the misery it would cause (The Economist, 2015). In developing economies such as India,

where whistleblowing is so important, the threat of retaliation is even more severe.

Satyendra Dubey and Manjunath Shanmugam serve as examples of two individuals who

paid the ultimate price of losing their livesfor blowing the whistle (Muttathil, 2018).

Despite the real threat against whistleblowers, it is crucial that countries such as India

come to view whistleblowing positively and create an environment that supports proper

whistleblowing behavior. For this reason, there is a need for researchers to study the

attitudes surrounding whistleblowing and whistleblowing behaviorin emerging economies.

The purpose of the current study is to examine the whistleblowing behavior in accounting

students and professionalsin India.

Whistleblowingis def‌ined as:

The disclosure by organization members (former or current) of illegal, immoral, or illegitimate

practices under the control of their employees, to persons or organizations that may be able to

ef‌fect action. (Near and Miceli, 1985,p.4)

Whistleblowing is recognized as an essential deterrent against fraud and corruption (Nayir

and Herzig, 2012). An established literature stream examines personal and contextual

factors affecting whistleblowing behavior (Near et al.,2004;Cassematis and Wortley, 2013;

Chen and Lai, 2014). Prior research shows that the self-eff‌icacy of the whistleblower and

perceived harm to the organization are positively related to whistleblowing propensity

(McNab and Worthley, 2008;Chen and Lai, 2014). Moreover, whistleblowing behavior

relates to the size and type of the wrongdoing as well as the organizational culture of the

company (Near et al.,2004;Robinson et al., 2012;Lui et al., 2015).

However, much of the literature has disproportionately focused on the Western

economies of the world, including the US, Canada and Europe. While prior research has

yielded signif‌icant conclusions, the f‌indings are not merely generalizable to the Asian

countries because of their unique cultural and legal environments. Moreover, the existing

literature has provided evidencethat whistleblowing behavior can vary signif‌icantly across

cultures (Brody et al.,1999;Park et al., 2005). Essentially,there is a dearth of literature from

emerging countries,especially India.

As mentioned previously, the threat of severeretaliation against whistleblowers in India

makes studying and improving attitudes surrounding whistleblowing very important.

Furthermore, the latest wave of globalization has created opportunities for Western

companies to offshore their servicesto low-cost countries such as India. Kesavan et al. (2013)

estimate that the average net gain realized by companies by offshoring their services to

India is approximately 30 per cent. These authors also note that the “Increased reporting

Whistleblowing

in India

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