Earnings management decisions and ineffective monitoring activities have contributed to financial accounting scandals and reduced confidence in firms’ reporting quality among potential investors, lenders and other creditors. The implementation of an effective top management team (TMT) is considered essential in this context. It is well known that top managers have considerable discretion over firms’ financial reporting since they choose whether and how to manage earnings. However, research has yet to establish the relationship between top managers’ diversity attributes and firms’ earnings management levels. Therefore, this study analyses whether and how top managers’ nationality, gender and age diversity are associated with accounting quality. Based on a sample of German DAX 30 listed firms from 2011 to 2018, we found that diversity in TMT nationality and gender have a positive impact on accounting quality. This relationship is context-dependent and negatively moderated by the tenure of the chief financial officer. Our findings provide novel insights on accounting quality for practitioners such as investors, regulators and stock corporations. The implications of this study further advance the academic debate on diversity in TMTs and its effects on earnings management.

Assessing whether a company is sustainable or not is challenging for investors. For this reason, it is particularly important how companies integrate and manage sustainability. This paper primarily aims to investigate the effects of implementing environmental, social and governance (ESG) key performance indicators (KPIs) in the internal management system (IMS) on ESG performance. Further, the effect of a consistent use of ESG KPIs in the IMS and the management compensation scheme (MCS) on ESG performance is examined. Using hand-collected data of the largest Germanlisted companies, this study employs t tests for differences in means and ordinary least square (OLS) regressions to study these associations. The results indicate that the implementation of ESG KPIs in the IMS increases ESG performance. In addition, the performance for environmental and social sub-dimensions is enhanced. No significant influence of a consistent use of ESG KPIs in the IMS and the MCS on ESG performance is observed. The results highlight that implementing ESG KPIs in the IMS is a practical approach to manage sustainability and to increase ESG performance. Our findings have practical and theoretical implications for researchers, regulators and companies considering the integration of sustainability and further communicating transparently and strengthening investor trust.

More and more companies worldwide are appointing a chief sustainability officer (CSO) to anchor the topic of sustainability at the top management level. This study examines how a CSO on the management board influences the quantity and quality of sustainability reports. While quantity is measured by the amount of information disclosed (sustainability disclosure), quality is measured as the decision for external assurance of the sustainability report, using the Global Reporting Initiative (GRI) guidelines as a reporting framework and publishing a combined report. Using a sample of German listed companies for the years 2017-2020, regression analysis is first conducted to analyse the impact of CSOs on sustainability reports. Second, the study shows how a chief executive officer (CEO) and a chief financial officer (CFO) impact sustainability reports when they also serve as CSOs. The results suggest that CSOs improve sustainability disclosure. In addition, a CSO positively impacts the decision for external assurance of the sustainability report but shows no impact on using the GRI guidelines and publishing a combined report. The results also show that a CFO positively influences sustainability disclosure, while a CEO does not. This study contributes to the growing literature on sustainable governance and how having a CSO on the management board impacts sustainability reporting. The study has numerous implications for regulators and practitioners. The most important insight is which management position should be responsible for sustainability to improve reporting and the limitations of that decision.