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We propose that top management team (TMT) relationship-related faultlines (ethnicity, gender, age), the hypothetical dividing lines that split a group into subgroups based on these demographic attributes, may reduce the possibility of a firm¡¯s financial misreporting because faultline-triggered relational conflicts and distrust between top managers in one subgroup (an in-group) and dissimilar members in other subgroups (out-groups) may hamper their cooperation in committing financial frauds. Moreover, the effects of TMT faultlines may be enlarged by the role interdependence between managers across subgroups in manipulating financial report. In particular, when the CEO and the CFO, whose cooperation is important for conducting fraudulent financial reporting, are in different subgroups, the effects of TMT faultlines on the possibility of a firm¡¯s financial misreporting are strengthened but such effects are weakened when the two are in the same subgroup. Statistical analyses of S&P1500 data provide support for our arguments.

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