Putting people from opposite political parties on the same corporate audit committee actually makes the company's math more honest.
SSRN · March 17, 2026 · 6309381
The Takeaway
Using data from 20 years of corporate boards, this study found that political dispersion creates a 'monitoring-through-distrust' effect. Instead of causing gridlock, the ideological friction emboldens members to dissent and increases professional skepticism, leading to fewer accounting tricks.
From the abstract
I examine how political dispersion within audit committees affects financial reporting quality. Using a sample of 45,274 observations from 2003-2022, I document a steady increase in committee-level political dispersion, driven primarily by the influx of Democratic-leaning female directors into formerly Republican-dominated audit committees. I find that political dispersion is negatively associated with discretionary accruals, a result robust to controlling for demographic diversity and state-lev