Ilham Nuryana Fatchan

Type of the article: Research Article

Abstract
Whistleblowing plays a critical role in fraud detection, especially in organizations where fraudulent activities can severely undermine performance and trust. This study, conducted at Universitas Muhammadiyah Surakarta (one of the leading private universities in Indonesia), examines how students in accounting and management programs decide to report misconduct, influenced by moral reasoning and ethical leadership. The data were collected in 2024 through an online questionnaire distributed to 246 accounting and management students who are likely to face ethical dilemmas in their professional environments.
The findings reveal a significant correlation between ethical leadership (t = 6.788, p = 0.014) and moral reasoning (t = 2.411, p = 0.017) in shaping students’ propensity to engage in whistleblowing. Specifically, ethical leadership, characterized by leaders who prioritize integrity, transparency, and ethical behavior, significantly encourages individuals to report wrongdoing. Moreover, strong moral reasoning enables individuals to better understand ethical considerations, fostering an environment where whistleblowing is seen as a responsible action.
Interestingly, although both factors positively influence whistleblowing decisions, moral reasoning does not moderate the effect of ethical leadership on these decisions (t = –0.479, p = 0.632). This suggests that ethical leadership acts as a direct motivator for whistleblowing, independent of an individual’s moral reasoning. Ultimately, this study underscores the importance of cultivating ethical leadership within organizations to support and encourage whistleblowing, thereby enhancing fraud detection mechanisms and overall organizational integrity. It offers valuable new insights into the dynamics of moral conduct and its implications for future organizational regulations.