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We study the effects of visits by headquarters' managers on facility-level misconduct. These visits are central to monitoring, but are difficult to observe for a large sample of firms. We use the staggered introduction of airline routes to identify exogenous reductions in travel time between headquarters and facilities as our measure of visits and test whether the reductions affect misconduct. We find that for the at-risk sample travel-time reductions decrease the number of violations by 2% and penalties by 23.4%, suggesting that management focuses on reducing costlier violations as opposed to simply reducing the number of violations. These effects are concentrated in firms with weaker control systems, suggesting that strong controls can act as substitutes for visits. Furthermore, the introduction of broadband internet attenuates, but does not eliminate the effect of reductions on misconduct. Finally, we find that reductions result in greater misconduct when firms are subject to performance pressure.

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We study the effect of financial incentives on whistleblowing and the consequences for whistleblowers under the cash‐for‐information program of the False Claims Act (FCA). Exploiting appeals‐court decisions that increase financial incentives for whistleblowing, we find that greater incentives increase the number of lawsuits filed with the regulator, the regulator's investigation length, the percentage of intervened lawsuits, and the percentage of settled lawsuits. Using information from lawsuits, a professional networking site, and background checks for up to 1,168 whistleblowers, we find that whistleblowers’ long‐term annual income decreases by approximately 8.6% or $6,500 but do not find evidence of social costs. In comparison, whistleblowers can expect to receive approximately $140,000 for blowing the whistle. Overall, our results suggest that the FCA cash‐for‐information program helps expose corporate misconduct and helps compensate whistleblowers for their income loss.

This paper examines whether fraud allegations affect firms' contracting with the government. Using a data set of whistleblower allegations brought under the False Claims Act against firms accused of defrauding the government, we find that federal agencies do not reduce the total dollar volume of contracts with accused firms; however, they substitute approximately 14% of the harderto-monitor cost-plus contracts for fixed-price contracts. This effect is concentrated in the procurement of services and explained by contract and service substitution. Finally, we find that after the conclusion of the investigation, the government reduces the contract dollar volume by approximately 15% for cases that resulted in a settlement. Our findings indicate that contract-design changes are used to mitigate uncertainty in suppliers' reputation. JEL codes: D82; G18; M41