Annual Conference
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Corporate Finance
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May 2025
Coalitions, Retaliation, and Whistleblowing: Evidence from Memorials of Qing China
Whistleblowing by senior local officials is pivotal for monitoring official behavior and suppressing corruption. Yet, the act of reporting is a strategic decision, entangled with complex considerations such as the risk of retaliation by those being reported and the gains from collusion. Despite its importance, there’s a notable gap in research on the strategic behavior of whistleblowers. This paper taps into historical evidence from Qing China’s memorials, which served as a confidential channel between the emperor and high-ranking local officials. Our focus is on memorials concerning natural disasters, specifically investigating whether officials obligated to report such disasters immediately would instead choose to form alliances to withhold information. We introduce a theoretical model to examine how coalitions among top local officials like governor-general and governor influence the whistleblowing. The model suggests that local officials are prone to underreporting when they are further from the years of reassignment or when they expect more collaboration opportunities in the future. A critical determinant in an official’s decision to disclose disaster information is the fear of peer retaliation; The more easily identifiable the whistleblower or the higher and politically stronger the position of their peers, the more likely underreporting becomes. Using data from memorials between 1723 and 1909 during the Qing dynasty, our empirical analysis corroborates our hypothesis: officials more distant from reassignment years tend to underreport disasters, with the probability of underreporting increasing by 2.5% for each year further from evaluation. Subsequent analysis dismisses other potential reasons for underreporting, including officials seeking personal gain from disaster relief or considering minor disasters unworthy of reporting, thus reinforcing the credibility of our conclusions. Our paper also highlights the consequences of the absence of whistleblowers: namely, more famines and a greater number of popular uprisings.
Keywords:
Whistleblowing, Political coalition, Disaster