Purpose The top management team (TMT), as the firm's core group, may have direct and indirect influences on return on assets (ROA) due to its heterogeneity. However, research on the TMT heterogeneity and ROA relationship remains limited in the construction industry. This study, therefore, aims to explore the nuanced effects of TMT heterogeneity on construction firms' ROA. Drawing on signaling theory, this study also considers the moderating effect of environmental information disclosure (EID). Design/methodology/approach Based on the data from the listed Chinese construction firms from 2014 to 2019, this study employs random-effects regression to test the research hypotheses. Findings The results reveal that TMT age, tenure, and educational level heterogeneity significantly reduce the ROA of construction firms, while TMT gender heterogeneity does not present a significant result. Interestingly, TMT age heterogeneity exhibits an inverted U-shaped relationship with ROA. Furthermore, the EID of construction firms weakens the negative relationship between TMT heterogeneity and ROA. Transparent environmental disclosure can attenuate the negative effects of TMT heterogeneity on ROA. Originality/value This study examines how different dimensions of TMT heterogeneity, including age, gender, tenure, and educational level, are associated with asset-based profitability (ROA) in the construction industry. It further identifies a nonlinear effect of age heterogeneity and highlights the moderating role of environmental information disclosure (EID), offering a more nuanced understanding of executive team composition in construction firms.
He et al. (Tue,) studied this question.