Restricted Stock is on the Rise: What Does this Mean for Whistleblowing?

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American Accounting Association

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Journal of Forensic Accounting Research

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The use of restricted stock to supplement compensation or to give a bonus to executives is on the rise. Research finds that private company employees are less likely to whistleblow than public company employees. Further, restricted stock may positively influence whistleblowing when large financial rewards are present, and vesting period and strike price influence whistleblowing for those with stock option compensation. Yet, there is limited investigation of whistleblowing related to the vesting period of the restricted stock and the type of organization granting this compensation. We find evidence of a significant interaction effect. For those in public companies, whistleblowing tends to increase with a longer vesting period, whereas those in private companies have the opposite behavior, as whistleblowing increases with shorter vesting periods of the restricted stock compensation. The lens of agency theory focused on whistleblowing theory helps resolve this seeming juxtaposition. Implications for practice and policy are offered.


Journal of Forensic Accounting Research, Vol. 7, No. 1 (2022): 237-254. DOI.