Definition of variables
| Variables | Definition | |
|---|---|---|
| Dependent variablesa | NCSKEW | Stock price crash risk measures for firm i |
| DUVOL | ||
| Treatment variables | RM_SUM | The three-year moving sum of the absolute value of real earnings management for firm i |
| RM_SUM_1 | Sum of abnormal discretionary expenses and abnormal production cost | |
| RM_SUM_2 | Sum of abnormal discretionary expenses and abnormal cash flows | |
| ICA_Index | A firm-specific internal control index from the DIB database constructed by Shenzhen DIB Enterprise Risk Management Technology. This index is a composite score reflecting the internal control quality based on listed firms' internal control disclosure, internal control assessment and auditing/assurance reports, with a higher index suggesting greater internal control quality | |
| INST | The percentage of institutional ownership for firm i | |
| Control variablesb | DTURN | The average monthly share turnover over the current fiscal year period minus the monthly share turnover over the previous fiscal year period for firm i. The monthly share turnover is calculated as the monthly trading volume divided by the total number of shares outstanding during the month for firm i |
| SIGMA | The standard deviation of firm-specific weekly return over the fiscal year period | |
| RET | The mean of firm-specific weekly returns over the fiscal year period for firm i, multiplied by 100 | |
| SIZE | The natural logarithm of total assets for firm i | |
| MB | The ratio of market value of equity to book value of equity for firm i | |
| LEV | The ratio of long-term debt to total assets for firm i | |
| ROE | The ratio of net profit to net assets for firm i | |
| NOA | A dichotomous variable equal to one if the net operating asset for firm i is higher than the industry average net operating assets and zero otherwise | |
| OPINION | A dichotomous variable equal to one if the non-standard audit opinion is issued by firm i's auditor to firm i and zero otherwise | |
| ACCR | The absolute value of discretionary accruals using the modified Jones models (Dechow, Sloan, & Sweeney, 1995) | |
| Variables | Definition | |
|---|---|---|
| Dependent variablesa | Stock price crash risk measures for firm | |
| Treatment variables | The three-year moving sum of the absolute value of real earnings management for firm | |
| Sum of abnormal discretionary expenses and abnormal production cost | ||
| Sum of abnormal discretionary expenses and abnormal cash flows | ||
| A firm-specific internal control index from the DIB database constructed by Shenzhen DIB Enterprise Risk Management Technology. This index is a composite score reflecting the internal control quality based on listed firms' internal control disclosure, internal control assessment and auditing/assurance reports, with a higher index suggesting greater internal control quality | ||
| The percentage of institutional ownership for firm | ||
| Control variablesb | The average monthly share turnover over the current fiscal year period minus the monthly share turnover over the previous fiscal year period for firm | |
| The standard deviation of firm-specific weekly return over the fiscal year period | ||
| The mean of firm-specific weekly returns over the fiscal year period for firm | ||
| The natural logarithm of total assets for firm | ||
| The ratio of market value of equity to book value of equity for firm | ||
| The ratio of long-term debt to total assets for firm | ||
| The ratio of net profit to net assets for firm | ||
| A dichotomous variable equal to one if the net operating asset for firm | ||
| A dichotomous variable equal to one if the non-standard audit opinion is issued by firm | ||
| The absolute value of discretionary accruals using the modified Jones models ( | ||
Note(s): aAll dependant variables are measured at time t. bAll treatment and control variables are measures at time t−1
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