Table 2.

Operational definition of variables

Variables nameDefinition and measurement
Panel A: Independent variables
LDONThe natural log of donations value
DONDThe dummy variable for donations equals One if the firm paid donations; otherwise, it is zero
LDON_ALPThe natural log of donations value paid by firms to the Australian labor party
LDON_LNPThe natural log of donations value paid by firms to the Australian liberal and national parties
LDON_OtherThe natural log of donations value paid for other political parties in Australia
Panel B: Dependent variables
CA_HOMeasured as cash plus short-term investments divided into book value of assets
CA_BAMeasured as cash balance divided by the book value of assets
LEVThe ratio of short and long-term debt scaled by the book value of total assets
MLEVCalculated as ratio of (short-term debt + long-term debt)/(short-term debt + long-term debt + market value of equity)
STDThe ratio of short-term debt to total asset
LTDThe ratio of long-term debt to total assets
INVEFFMeasured as the absolute value of the difference between actual and expected investment
UN_INVMeasured as the negative values of actual investment – expected investment
OV_INVMeasured as the positive values of actual investment – expected investment
Panel C: Control variables
DUALThe dummy variable equals One if the CEO serves as the chairman of the board; otherwise, it is zero
BIGNThe dummy variable equals One if the firm auditor is One of the big Four; otherwise, it is zero
BODNumber of directors on the board
DIVDThe dummy variable is equal to One if the dividend is paid; otherwise, it is zero
MTBMarket value to book value
FEMALEThe ratio of female directors on the board
BINDThe ratio of independent directors on the board
AGEMeasured as the natural logarithm value of the number of years between the fiscal year and the listing year
SIZEMeasured as a log of market capitalization
NDTSNondebt tax shields measured an annual depreciation expense to total assets
LIQIUDCurrent assets to current liabilities
RISKMeasured as the standard deviation of return on assets
CAFLRThe ratio of net operating cash flow to total assets
ROAReturn on assets, measured as [Net Income + Interest Expense*(1-Corporate Tax Rate)]/[Total Assets - Outside Equity Interests]

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