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An Investigation of the Influence of Guilt, Awards, and a Moral Message on Tax Whistleblowing Decisions

Jonathan Farrar ^a

Thomas Farrar ^b

Cass Hausserman ^c

Morina Rennie ^d

^{^a}Wilfrid Laurier University, Canada

^{^b}Cape Peninsula University of Technology, South Africa

^{^c}Portland State University, USA

^{^d}University of Regina, Canada

Advances in Taxation

ISBN: 978-1-83549-585-8

Publication date: 20 June 2024

Abstract

We examine experimentally the extent to which three potential tax authority interventions encourage the reporting of tax fraud to tax authorities and how two types of guilt feelings are involved in this decision. Using a sample of 728 adult taxpayers in the United States, we find that a cash award, a prosocial award and a moral suasion message positively influence whistleblowing intentions and that the moral suasion effect is mediated by intrapsychic guilt (when an individual violates their moral values) and interpersonal guilt (when one's actions cause harm to another). The combination of a cash award and moral suasion message results in the greatest likelihood of tax whistleblowing. Our research contributes to the tax whistleblowing literature by providing evidence of the efficacy of potential interventions and also extends literature on the role of moral emotions by showing the relevance of intrapsychic and interpersonal guilt to the tax fraud reporting decision.

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Acknowledgements

Acknowledgments

The authors gratefully acknowledge research funding from the Center for Accounting Ethics, University of Waterloo. The authors also acknowledge helpful comments from an anonymous reviewer, participants at a workshop at the University of Central Florida (April 2022), the 2019 Administrative Sciences Association of Canada conference, the 2019 European Accounting Association conference, the 2019 Tax Administration Research Center (TARC) annual workshop (Exeter, UK), and the 2018 Behavioral Accounting Symposium, Lazaridis School of Business & Economics, Waterloo, ON.

Citation

Farrar, J., Farrar, T., Hausserman, C. and Rennie, M. (2024), "An Investigation of the Influence of Guilt, Awards, and a Moral Message on Tax Whistleblowing Decisions", Hasseldine, J. (Ed.) Advances in Taxation (Advances in Taxation, Vol. 31), Emerald Publishing Limited, Leeds, pp. 135-163. https://doi.org/10.1108/S1058-749720240000031005

Publisher

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Emerald Publishing Limited