Table 13

Partition data based on corporate governance

Panel A: Logit regression
Discretionary Bonus
Low corporate Governance (1)High corporate Governance (2)Low corporate Governance (3)High corporate Governance (4)
Intercept−1.873**−2.675***−1.393*−1.928**
(0.010)(<0.001)(0.06)(0.011)
Accounting Quality1it−0.283**−0.423***  
(0.015)(<0.001)  
Accounting Quality2it  −0.872**−1.277***
  (0.036)(0.002)
ROA Volatilityit−3.1072.375−3.0342.485
(0.349)(0.541)(0.359)(0.522)
Return Volatilityit4.562**−0.2324.578**−0.02
(0.022)(0.904)(0.021)(0.992)
CEO Tenureit0.049***0.029***0.050***0.029***
(<0.001)(<0.001)(<0.001)(<0.001)
CEO Dualityit−0.278**−0.121−0.285**−0.105
(0.035)(0.370)(0.031)(0.437)
R&D to Salesit−1.488*−0.143−1.483*−0.175
(0.071)(0.783)(0.071)(0.744)
B/M Ratioit−0.275*0.320*−0.273*0.318*
(0.080)(0.084)(0.085)(0.086)
Lossit−0.133−0.308−0.137−0.285
(0.576)(0.200)(0.565)(0.234)
Sizeit−0.059−0.079−0.065−0.096*
(0.241)(0.161)(0.199)(0.088)
Leverageit−2.338***−0.743*−2.361***−0.782*
(<0.001)(0.073)(<0.001)(0.059)
Annual Returnit0.0240.459***0.0280.473***
(0.885)(0.002)(0.865)(0.001)
ROAit0.4062.105**0.4752.285**
(0.676)(0.019)(0.625)(0.011)
Year indicatorsYesYesYesYes
Industry fixed effectYesYesYesYes
Number of observations2,5872,5872,5872,587
Pseudo R20.1170.0890.1160.086
Panel B: The difference between coefficients of low and high corporate governance sample
The difference between coefficients on Accounting Quality 10.019
p-value(0.322)
The difference between coefficients on Accounting Quality 20.051
p-value(0.473)

Note(s): This table presents the logit regression results of the sample data partitioned into two subsamples depending on whether a firm’s corporate governance level is above or below the sample median. Columns 1 and 3 present regression results of the observations with the corporate governance level below the sample median. Columns 2 and 4 present regression results of the observations with the corporate governance level above the sample median. The corporate governance level is a composite of multiple measures, board independence, CEO ownership, institutional ownership, busy board, CEO chair duality, and Entrenchment, which are included in the research of Guest et al. (2022). The corporate governance level is measured by the average of standardized percentage of independent directors on a board, standardized CEO ownership percentage, standardized institutional ownership percentage, the opposite of standardized CEO chair duality, the opposite of standardized busy director percentage on a board, and the opposite of standardized entrenchment score

In Columns 1 and 2, the independent variable Accounting Quality1 is a composite measure, which is the average of standardized Big4, standardized Earning Predict CF, and the opposite of standardized Abnormal Accruals. In Columns 3 and 4, Accounting Quality2 is also a composite measure, which is the average of the three ranks scaled by the number of observations: the rank in Big4, the rank in Earning Predict CF, and the rank in Abnormal Accruals (in decreasing order)

The difference and its significance between coefficients in two regressions of high and low corporate governance samples are measured by linear probability model. The P-values in the tests of the difference are from two-tailed Z-tests as per Clogg et al. (1995) and Paternoster et al. (1998). All other variables are defined in Appendix. *, **, and *** indicate that the estimated coefficients are statistically significant at the 0.10, 0.05, and 0.01% level, respectively. P-values in brackets are from two-tailed t-tests

[ViewLarge]
This Feature Is Available To Subscribers Only

or Create an Account

Close Modal
Close Modal