Management Faultlines and Management Forecasts

• 成果类型: Article
• 署名作者: Liu, Xiaotao Kelvin; Van Peteghem, Mathijs
• 署名单位: Northeastern University; Maastricht University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12798
• 发表日期: 2022
• 页码: 2517-2559
• 关键词: WORK GROUP DIVERSITY; EARNINGS FORECASTS; DEMOGRAPHIC FAULTLINES; team characteristics; CONFLICT; GENDER; CONSEQUENCES; performance; SUBGROUPS; MODEL

摘要

We examine whether management faultlines (i.e., dissimilar groupings among executives) are related to management forecast processes and outcomes. Management faultlines are formed based on the simultaneous alignment of senior executives' demographic characteristics (e.g., an MBA background, elite school education, gender, board experience, age, or tenure). We argue that management faultlines impede information sharing, create conflicts, and divert managerial attention away from common-goal tasks. We hypothesize and find that management faultlines are associated with lower management forecast quality. Furthermore, the faultline effect is more pronounced when forecasting difficulty is high. In contrast, the faultline effect is mitigated when a firm nurtures a supportive and diverse workplace. In addition, we find that management forecast propensity and frequency are negatively associated with management faultlines. Overall, our findings suggest that management faultlines compromise management forecast processes and outcomes. In particular, since faultlines can arise as a company diversifies, boards should be aware of these unintended consequences and how they can be mitigated.