Table 2 Measurement of variables...

Table 2

Measurement of variables

Variable	Definition	Source
Control variables
SIZE	Firm size defined as the log of a firm’s market value of equity	CSMAR
TOBIN_Q	Tobin Q measured as market value of equity divided by book value of equity at the end of the year	CSMAR
DEBT	Firm leverage defined as the total liabilities to total assets	CSMAR
ROA	Return on assets defined as the net profit scaled by total assets	CSMAR
AGE	Firm age defined as the number of years since a firm has been listed	CSMAR
REST	A binary variable refers to financial restatements coded 1 if a firm restated the financial reports in a year (t), and zero otherwise	CSMAR
DAC	Discretionary accruals calculated using adjusted-Jones models as follows ${T A}_{i, t} / A_{i, t - 1} = α_{0} (1 / A_{i, t - 1}) + α_{1} ({Δ R E V}_{i, t} / A_{i, t - 1}) + α_{2} ({P P E}_{i, t} / A_{i, t - 1})$ (A. 1) ${N D A}_{i, t} / A_{i, t - 1} = α_{0} (1 / A_{i, t - 1}) + α_{1} [({Δ R E V}_{i, t} - {Δ R E C}_{i, t}) / A_{i, t - 1}] + α_{2} ({P P E}_{i t} / A_{i, t - 1}) + ε_{i, t}$ (A. 2) ${D A C}_{i, t} = {T A}_{i, t} / A_{i, t - 1} - {N D A}_{i, t} / A_{i, t - 1}$ (A. 3) Where ${T A}_{i, t}$ is total accruals of a firm i in fiscal year t, $A_{i, t - 1}$ is one year lagged total assets, ${Δ R E V}_{i, t}$ is the total revenue in fiscal year t minus the total revenue in fiscal year t−1 scaled by total assets in fiscal year t−1. ${Δ R E C}_{i, t}$ is net receivables in fiscal year t minus net receivables in fiscal year t−1 scaled by total assets in fiscal year t−1. ${P P E}_{i, t}$ is total property plant and equipment in fiscal year t scaled by total assets in fiscal year t−1. ${N D A}_{i, t}$ is the non-discretionary accruals for firm i in fiscal year t, and DAC is the discretionary accruals	CSMAR
CSRR	CSR rating defined as the scores of a firm CSR performance
SOE	State-owned enterprises defined as dummy variable equals one if the firm affiliated by the government	CSMAR
TOP10	The percentage of ownership of top 10 largest shareholders	CSMAR
IOWN	Institutional ownership defined as the percentage of institutional ownership	CSMAR
BSIZE	The board size defined as number of directors on the board of the firm	CSMAR
BIND	Board independence measured as the ratio of independent directors in the board	CSMAR
DUAL	A binary variable coded 1 if the CEO is the chairman of the board	CSMAR
Moderating variables
FC	Financial constraints proxy measured using SA index calculated as follows FC= (−0.737SIZE) + (0.043 SIZE²) - (0.040*AGE). Where SIZE refers to the firm size measured as the total assets and AGE refers to the number of years a firm has been listed	CSMAR
FC_D	A dummy variable coded 1 if FC is more than the median FC, zero otherwise	CSMAR
EPU	Baker et al. (2016) EPU index, defined as the number of articles that mention the uncertainty in future economic policy of the government in major newspapers	Baker et al. (2016)
EPU_D	A dummy variable coded 1 if the EPU is more than the median EPU, zero otherwise	Baker et al. (2016)
IC	Internal control environment defined as the composite score of IC strength derived from five dimensions of IC: financial reporting quality, operational efficiency, asset safety, IC strategies, and legal compliance. IC ranges from 1 to 1000, where a low value represents a weak IC environment	DIB Internal Control and Risk Management Database
IC_D	A dummy variable coded 1 if the IC is more than the median of IC, zero otherwise	As above

Variable	Definition	Source
Control variables
SIZE	Firm size defined as the log of a firm’s market value of equity	CSMAR
TOBIN_Q	Tobin Q measured as market value of equity divided by book value of equity at the end of the year	CSMAR
DEBT	Firm leverage defined as the total liabilities to total assets	CSMAR
ROA	Return on assets defined as the net profit scaled by total assets	CSMAR
AGE	Firm age defined as the number of years since a firm has been listed	CSMAR
REST	A binary variable refers to financial restatements coded 1 if a firm restated the financial reports in a year (t), and zero otherwise	CSMAR
DAC	Discretionary accruals calculated using adjusted-Jones models as follows ${T A}_{i, t} / A_{i, t - 1} = α_{0} (1 / A_{i, t - 1}) + α_{1} ({Δ R E V}_{i, t} / A_{i, t - 1}) + α_{2} ({P P E}_{i, t} / A_{i, t - 1})$ (A. 1) ${N D A}_{i, t} / A_{i, t - 1} = α_{0} (1 / A_{i, t - 1}) + α_{1} [({Δ R E V}_{i, t} - {Δ R E C}_{i, t}) / A_{i, t - 1}] + α_{2} ({P P E}_{i t} / A_{i, t - 1}) + ε_{i, t}$ (A. 2) ${D A C}_{i, t} = {T A}_{i, t} / A_{i, t - 1} - {N D A}_{i, t} / A_{i, t - 1}$ (A. 3)Where ${T A}_{i, t}$ is total accruals of a firm i in fiscal year t, $A_{i, t - 1}$ is one year lagged total assets, ${Δ R E V}_{i, t}$ is the total revenue in fiscal year t minus the total revenue in fiscal year t−1 scaled by total assets in fiscal year t−1. ${Δ R E C}_{i, t}$ is net receivables in fiscal year t minus net receivables in fiscal year t−1 scaled by total assets in fiscal year t−1. ${P P E}_{i, t}$ is total property plant and equipment in fiscal year t scaled by total assets in fiscal year t−1. ${N D A}_{i, t}$ is the non-discretionary accruals for firm i in fiscal year t, and DAC is the discretionary accruals	CSMAR
CSRR	CSR rating defined as the scores of a firm CSR performance
SOE	State-owned enterprises defined as dummy variable equals one if the firm affiliated by the government	CSMAR
TOP10	The percentage of ownership of top 10 largest shareholders	CSMAR
IOWN	Institutional ownership defined as the percentage of institutional ownership	CSMAR
BSIZE	The board size defined as number of directors on the board of the firm	CSMAR
BIND	Board independence measured as the ratio of independent directors in the board	CSMAR
DUAL	A binary variable coded 1 if the CEO is the chairman of the board	CSMAR
Moderating variables
FC	Financial constraints proxy measured using SA index calculated as follows FC= (−0.737SIZE) + (0.043 SIZE²) - (0.040*AGE). Where SIZE refers to the firm size measured as the total assets and AGE refers to the number of years a firm has been listed	CSMAR
FC_D	A dummy variable coded 1 if FC is more than the median FC, zero otherwise	CSMAR
EPU	Baker et al. (2016) EPU index, defined as the number of articles that mention the uncertainty in future economic policy of the government in major newspapers	Baker et al. (2016)
EPU_D	A dummy variable coded 1 if the EPU is more than the median EPU, zero otherwise	Baker et al. (2016)
IC	Internal control environment defined as the composite score of IC strength derived from five dimensions of IC: financial reporting quality, operational efficiency, asset safety, IC strategies, and legal compliance. IC ranges from 1 to 1000, where a low value represents a weak IC environment	DIB Internal Control and Risk Management Database
IC_D	A dummy variable coded 1 if the IC is more than the median of IC, zero otherwise	As above

Note(s): This table is prepared by the authors

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