Title: Corporate Social Responsibility and Whistleblowing

Authors: Yifei Chen (Southwestern University of Finance and Economics), Feng Gao (Rutgers Business School), Hua Christine Xin (Mitchell College of Business)

Abstract: We document a seemingly counterintuitive positive association between a firm’s performance in corporate social responsibility (CSR) and whistleblowing. Although CSR performance reduces financial wrongdoing, employees in firms with stronger CSR performance are more likely to whistleblow when they observe wrongdoing. Whistleblowing is more frequent in firms with recent restatements and lawsuits, consistent with the speak-up culture. The positive relation is weaker in states with greater increases in unemployment benefits, consistent with CSR performance reducing retaliation risk. Additionally, better CSR performance lowers employee disgruntlement. Cases filed against these firms are more likely to have merit, associated with more negative market reactions, and more effective in deterring future financial misconduct.