Seminar (Dept. of Finance)

Title: Whistleblowing and Regulatory Arbitrage in Labor: Accountants of International Firms in the U.S.

Speaker: Lin Yupeng, Associate Professor, NUS Business School, National University of Singapore

Time: 10:00-11:30, Nov 15, 2024 (Friday)

Venue: Room 1008, Mingde Business Building

Language: English/Chinese

ABSTRACT:

This study investigates how international firms strategically allocate accountants to minimize their exposure to whistleblowing risk following the implementation of the 2011 SEC Whistle-blower Program. The results show that firms subject to the program reduce their U.S.-based accountants than control international firms, supporting the regulatory arbitrage hypothesis. This reduction is not accompanied by changes in non-accounting employees, sales, or investments. Instead, firms strategically shrink their U.S. accounting teams to mitigate whistleblowing risks, particularly when they have higher corruption exposure, greater U.S. business reliance, or operate in countries with less regulatory cooperation with U.S. authorities. Further analysis reveals that firms reduce new hiring in the U.S. while retaining more senior accountants and expanding accounting teams in their home countries, especially in regions more prone to corruption. Finally, the firms exhibit increased accounting opacity without significantly impacting production efficiency