Financial decisions and top management team composition

✍ Scribed by Conrad S. Ciccotello; Edward J. Conrad; Michael J. Fekula; C.Terry Grant

• Book ID: 104345516
• Publisher: Elsevier Science
• Year: 2000
• Tongue: English
• Weight: 922 KB
• Volume: 17
• Category: Article
• ISSN: 0882-6110
• DOI: 10.1016/s0882-6110(00)17007-5

✦ Synopsis

We study the relationship between financial decision making and top management team (TMT) composition using a sample of firms that choose the early adoption of the income decreasing accounting standard, SFAS No . 106 . If early adoption addresses political costs or signals future performance improvement, then the decision is one that demands a high level of accounting and finance sophistication . We observe that the TMT composition of early adopters is consistent with this expectation . Relative to a control group, TMTs of early-adopting firms are nearly twice as likely to have dominant functional backgrounds in accounting and finance . Early adopters' TMTs also tend to have newer members, suggesting a bias for action .