Semester Award Granted

Summer 2025

Submission Date

August 2025

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Thesis/Dissertation Advisor [Chair]

Maya Thevenot

Abstract

This study examines whether faultlines within top management teams (TMT) influence financial reporting quality (FRQ). Faultlines reflect hypothetical divisions within a group based on team members’ unique demographic characteristics and experiences. Using a large sample of U.S. firms from 2003 to 2020, I construct a faultline measure based on executive gender, age, tenure, education, and board experience. I test whether faultlines negatively associate with FRQ, proxied by measures of restatements and accruals quality. I further investigate faultline type, based on the demographic (gender and age) and task-related (tenure, education, and board experience) components. The main results do not support the prediction that faultlines, whether overall, demographic, or task-related, affect FRQ. However, in cross-sectional settings, I find some evidence that demographic faultlines associate with improved FRQ when complexity is low. This contrasts with previous research that suggests faultlines are detrimental to team outcomes. This paper contributes to the mixed evidence on TMT characteristics, and I call for future research to adopt more standardized measures of the TMT and encourage replications.

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