*2.3. Demographic Diversity and TADV*

As boards of directors monitor the disclosure of business information, their characteristics may condition the policy of business information disclosure (Hambrick 2007; Hiebl 2014). As outlined earlier, the theory of upper echelons is based on the idea that managerial characteristics could affect their choices and that the choices of managers are influenced by their cognitive base and values (Hambrick and Mason 1984). However, psychological factors of managers are very difficult to measure, and thus, demographic variables are considered as good proxies (Hambrick and Mason 1984; Nielsen 2010). In this sense, "managers' unique disclosure styles are associated with observable demographic characteristics of their personal backgrounds" (Bamber et al. 2010, p. 1131). Bamber et al. (2010) note that managers must comply with legal deadlines for submission, in addition to deciding what type of voluntary information may be disclosed.

One of the corporate governance characteristics considered by prior literature to affect the quality of the corporate board's monitoring, and thus, firm's financial performance, is the board's demographic diversity (Campbell and Minguez-Vera 2008; Carter et al. 2010; Shehata et al. 2017) as a way to portray the influence of personal and psychological characteristics of managers. In this sense, greater diversity is beneficial because that variety may influence what information is brought into decision-making processes (Post and Byron 2015), although there is a trade-off between the benefits and costs of diversity on board effectiveness (Bennouri et al. 2018). We argue that certain demographic profiles reduce risk-taking, and thus, are more likely to lead to law-abiding actions. In this line, the second proposition (P2) in relation to the board's demographic diversity is posited as:

P2: Certain demographic characteristics will reduce the likelihood of TADV.

One specific characteristic of demographic diversity in the board is the age of a manager, which reflects well the attitude towards risk and actual risk-taking behaviour (Plöckinger et al. 2016). Thus, the manager's age is related to risk aversion (Jianakoplos and Bernasek 1998) and even to the acceptance of financial fraud (Troy et al. 2011). Younger managers are more inclined towards risky strategies such as law violations. On the contrary, more mature managers are more risk-averse (MacCrimmon and Wehrung 1990). Older CEOs are less involved in dishonest actions (Troy et al. 2011) because maturity has also been associated with higher levels of moral development and stricter interpretations of firm's ethical standards of conduct (Serwinek 1992), therefore resulting in a lower likelihood of engaging in or facilitating unethical behaviours (Ortiz-de-Mandojana et al. 2018). Consequently, for the demographic diversity proposition, the first hypothesis (H2a) is stated as follows:

**Hypothesis 2a.** *Managerial age will reduce the likelihood of TADV.*

A common measure of demographic diversity is gender. According to prior literature, risk aversion also differs by gender (e.g., Jianakoplos and Bernasek 1998; Ho et al. 2015). The specific corporate governance variable usually applied is the existence of women on the board. From an informational perspective, female directors may contribute to decision-making processes because of their different knowledge, experience, and values (Kanadli et al. 2018). In addition, even in majority male boards, women isolation and minorities have the potential to influence the board's decision-making (Kanadli et al. 2018). Some authors argue that female directors are more likely to be objective and independent (Fondas 2000), and thus, they could follow legal requirements better than male directors because women directors reduce the level of conflicts (Nielsen and Huse 2010). Indeed, their presence enhances board information, perspectives, debate and decision-making (Burke 2000). For example, an equilibrated board tends to mitigate earnings management practices, reinforcing obedience to the law (Saona et al. 2018). Other studies in this line support the idea that women are more ethical than men (Glover et al. 2002; Larkin 2000; Wahn 2003). In this way, earnings quality and voluntary disclosure levels increase when gender diversity exists in boards (Krishnan and Parsons 2008; Liao et al. 2015). Some authors argue that having women in boards influences not only what information is used in decision-making but also how, because females do have different organizational skills than males (Adams and Funk 2012; Post and Byron 2015). Additionally, Ho et al. (2015) found that companies with female CEOs report information more conservatively when companies face high litigation or risks. Relying on the afore-given argumentation, we posit the following hypothesis (H2b) for the demographic diversity proposition:

**Hypothesis 2b.** *The presence of women on the board will reduce the likelihood of TADV.*
