Variable definition
| Variable | Description |
|---|---|
| Complexity1 | FOG = 0.4 × [number of words/number of sentences + 100 × (number of words with more than three syllables/number of words)] computed precisely as in Li (2008) |
| Complexity2 | SMOG = 1.043 × sqrt [30 × number of words with more than two syllables/number of sentences] + 3.1291 |
| Complexity3 | ARI = 4.71 × (characters/words) + 0.5 × (words/sentences) – 21.43 |
| CEOOC | 1 if capital expenditures deflated by lagged total assets exceed the industry-year median, 0 otherwise |
| CEOTen | The number of years working as a CEO in the firm |
| CEOFinExpt | 1 if the CEO is a financial expert, 0 otherwise |
| BInd | The proportion of independent directors on the board |
| BFinExpt | The percentage of financial experts on the board of directors |
| InstOwn | The percentage of the company's shares owned by institutional owners |
| Size | The natural log of total assets |
| ROA | Return on assets calculated as the ratio of net income to total assets |
| Accruals | Total accruals calculated as earnings minus operating cash flows to total assets |
| Loss | 1 if net income is negative, and 0 otherwise |
| SalesG | One-year growth rate in sales |
| MTB | Market-to-book ratio calculated as the market value of the firm divided by its book value |
| LnAge | The natural logarithm of the number of years the firm is established |
| ForeignS | 1 if the firm has foreign sale, and 0 otherwise |
| Segment | 1 if the firm has subsidiaries |
| Additional variables | |
| Complexity4 | FK = 0.39 × [number of words/number of sentences] + 11.8 × [number of syllables/number of words] – 15.59 |
| Complexity5 | FRE = 206.835–1.015 (total words/total sentences) – 84.6 (total syllables/total words) |
| Complexity6 | The natural logarithm of words number |
| CEOOC1 | 1 if the residual of industry-year regressions of total asset growth on sales growth is positive, and 0 otherwise |
| CEOOC2 | 1 if the difference between managerial forecasts of earnings per share (EPS) and the actual values is positive, and 0 otherwise |
| LnPages | The natural logarithm of the number of pages |
| FileSize | File size in megabyte (MB) |
| LnSentences | The natural logarithm of the number of sentences |
| Profitability | Net income after tax divided by the total assets |
| Tone | (Positive words – negative words)/(positive words + negative words) |
| FemaleDirector | A binary variable that takes the value 1 if there is at least one female director on the board, and 0 otherwise |
| MaleCEO | A binary variable that takes the value 1 if the CEO is male, and 0 otherwise |
| CEODegree | A binary variable that takes the value 1 if the CEO possesses an advanced degree such as Master of Business Administration (MBA) or Doctor of Philosophy (Ph.D). It is set to 0 if CEOs hold bachelor's degrees or other higher education qualifications |
| CEOQual | A binary variable that takes the value 1 if the CEO has professional qualifications (e.g. Certified Public Accountant), and 0 otherwise |
| PredCEOOC | Predicted values for CEOOC from the first stage of the regression model in the instrumental variables method |
| Variable | Description |
|---|---|
| FOG = 0.4 × [number of words/number of sentences + 100 × (number of words with more than three syllables/number of words)] computed precisely as in | |
| SMOG = 1.043 × sqrt [30 × number of words with more than two syllables/number of sentences] + 3.1291 | |
| ARI = 4.71 × (characters/words) + 0.5 × (words/sentences) – 21.43 | |
| 1 if capital expenditures deflated by lagged total assets exceed the industry-year median, 0 otherwise | |
| The number of years working as a CEO in the firm | |
| 1 if the CEO is a financial expert, 0 otherwise | |
| The proportion of independent directors on the board | |
| The percentage of financial experts on the board of directors | |
| The percentage of the company's shares owned by institutional owners | |
| The natural log of total assets | |
| Return on assets calculated as the ratio of net income to total assets | |
| Total accruals calculated as earnings minus operating cash flows to total assets | |
| 1 if net income is negative, and 0 otherwise | |
| One-year growth rate in sales | |
| Market-to-book ratio calculated as the market value of the firm divided by its book value | |
| The natural logarithm of the number of years the firm is established | |
| 1 if the firm has foreign sale, and 0 otherwise | |
| 1 if the firm has subsidiaries | |
| FK = 0.39 × [number of words/number of sentences] + 11.8 × [number of syllables/number of words] – 15.59 | |
| FRE = 206.835–1.015 (total words/total sentences) – 84.6 (total syllables/total words) | |
| The natural logarithm of words number | |
| 1 if the residual of industry-year regressions of total asset growth on sales growth is positive, and 0 otherwise | |
| 1 if the difference between managerial forecasts of earnings per share (EPS) and the actual values is positive, and 0 otherwise | |
| The natural logarithm of the number of pages | |
| File size in megabyte (MB) | |
| The natural logarithm of the number of sentences | |
| Net income after tax divided by the total assets | |
| (Positive words – negative words)/(positive words + negative words) | |
| A binary variable that takes the value 1 if there is at least one female director on the board, and 0 otherwise | |
| A binary variable that takes the value 1 if the CEO is male, and 0 otherwise | |
| A binary variable that takes the value 1 if the CEO possesses an advanced degree such as Master of Business Administration (MBA) or Doctor of Philosophy (Ph.D). It is set to 0 if CEOs hold bachelor's degrees or other higher education qualifications | |
| A binary variable that takes the value 1 if the CEO has professional qualifications (e.g. Certified Public Accountant), and 0 otherwise | |
| Predicted values for | |
Source(s): Author’s own creation
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