Journal of Business Ethics

, Volume 131, Issue 4, pp 757–772 | Cite as

An Examination of Financial Sub-certification and Timing of Fraud Discovery on Employee Whistleblowing Reporting Intentions

  • D. Jordan Lowe
  • Kelly R. Pope
  • Janet A. Samuels


The Sarbanes–Oxley Act of 2002 (SOX) requires company executives to certify financial statements and internal controls as a means of reducing fraud. Many companies have operationalized this by instituting a sub-certification process and requiring lower-level managers to sign certification statements. These lower-level organizational members are often the individuals who are aware of fraud and are in the best position to provide information on the fraudulent act. However, the sub-certification process may have the effect of reducing employees’ intentions to report wrongdoing. We suggest that subordinates with knowledge of a superior who committed a fraudulent act and certified that there is no fraud will feel less personal responsibility to report the act, thus, decreasing reporting intentions. Additionally, we suggest that if the fraud is discovered subsequent to the reports being filed with the Securities and Exchange Commission (SEC), employees will perceive lower management responsiveness to investigate the fraud, which will reduce intentions to report. Using an experimental approach, we manipulate two between-participant variables: (1) the presence or absence of sub-certification by the transgressor and (2) the timing of fraud discovery, either before or after the reports have been filed with the SEC. We find that when sub-certification is present, perceived personal responsibility and intentions to report were diminished compared to when sub-certification is absent. Timing of the discovery of the fraudulent act did not influence perceived management responsiveness or reporting intentions. Supplemental analysis shows that personal responsibility partially mediates the relationship between sub-certification and reporting intentions. Our findings suggest that audit committees and senior executives may want to carefully consider the costs and benefits of the sub-certification process.


Sub-certification Reporting intentions Misappropriation of assets Fraud 



The authors wish to acknowledge helpful comments from Steve Kaplan. We would also like to thank DePaul University for their assistance in obtaining research participants.


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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • D. Jordan Lowe
    • 1
  • Kelly R. Pope
    • 2
  • Janet A. Samuels
    • 3
  1. 1.W. P. Carey School of BusinessArizona State UniversityTempeUSA
  2. 2.College of CommerceDePaul UniversityChicagoUSA
  3. 3.Thunderbird School of Global ManagementGlendaleUSA

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