Purpose This study aims to investigate whether whistleblowing protection policies (WBPs) mitigate accrual and real earnings management (AEM and REM) among UK FTSE 350 firms, examining their role as an integral component of corporate governance. Design/methodology/approach Drawing on agency theory and the informativeness principle, the study uses both ordinary least squares and instrumental variable quantile regression analyses to explore how WBPs affect different levels of EM. The sample comprises 352 FTSE 350 firms between 2010 and 2020, spanning both financial and non-financial sectors. Findings The results show that WBPs significantly reduce both AEM and REM, particularly in firms with mid-to-high levels of managerial discretion. WBPs act as a complementary layer of governance, most effective when traditional mechanisms, such as board independence or audit committee strength, are weak or inconsistently enforced. Sectoral differences emerge, with stronger effects in financial firms, while Brexit-related uncertainty reinforces the efficacy of WBP in enhancing reporting quality. Research limitations/implications The binary measure of WBP adoption does not capture variations in policy quality or enforcement. Future research should explore qualitative dimensions and cross-country comparisons. Practical implications The findings highlight that WBPs should not be treated as symbolic but embedded into governance frameworks. Regulators should consider mandating more detailed WBP disclosures, while boards should strengthen whistleblowing channels to enhance monitoring effectiveness. Social implications Strengthening whistleblowing systems contributes to greater corporate accountability and public trust in financial reporting, supporting broader societal goals of transparency and ethical corporate conduct. Originality/value To the best of the authors’ knowledge, this is one of the first UK-based studies to demonstrate that WBPs mitigate both AEM and REM. It extends the literature by applying agency theory and the informativeness principle to internal whistleblowing, offering new insights into layered governance practices in varying institutional contexts.
Elsalem et al. (Wed,) studied this question.