Table A1 Variable definitions SMOOTHING... | Emerald Publishing

Table A1

Variable definitions

${SMOOTHING}_{it}$	standard deviation of earnings before extraordinary and discontinued items for the most recent five years divided by standard deviation of cash flow from operating activities for the most recent five years
${ABS_DAC}_{it}$	absolute value of discretionary accruals, also known as signed discretionary accruals, is determined using the modified Jones model and the performance match model, which incorporates return on assets (ROA) as one of its regressors
${DAC_MJ}_{it}$	abnormal accruals, as outlined by Dechow et al. (1995), are calculated according to the estimation procedure laid out in Equation (1)
DAC_K	abnormal accruals, as outlined by Kothari et al. (2005), are calculated according to the estimation procedure laid out in Equation (2)
LOSS_AVOIDANCE	firms with small positive earnings (small negative earnings), which is set as 1 if firms with small positive earnings (small negative earnings), 0 otherwise
${ADJ_ROA}_{it + 1}$	industry size-adjusted return on assets in year t+1 ${ADJ}_{ROA}_{it + 1} = {ROA}_{it + 1} - {MEDIAN}_{ROA}_{it + 1}$ Where ${MEDIAN_ROA}_{it + 1}$ ⁠: median of all firms having ROA with the same industry and similar in size (book value of total assets within 70–130%) in year t+1
${CSRI}_{i, t}$	${CSRI}_{i, t} = \frac{\sum_{1}^{k} {CSR}_{i, t}}{N}$ Where N: maximum number of items that a firm discloses CSR CSR: total disclosure score of firm i in year t
${GROWTH}_{i, t}$	sales growth, which is sales of firm i in year t minus sales in year t−1, divided by sales in year t−1
${BIG 4}_{i, t}$	indicator is assigned a value of 1 if firm i undergoes auditing by a Big Four auditor in year t, and it is set to zero otherwise
${ROA}_{it - 1}$	returns on assets, which is equal to the net income of firm i in year t−1 divided by total assets
${LEV}_{it - 1}$	financial leverage, which is the total debts of firm i in year t−1, divided by total assets
${DUAL}_{it}$	indicator variable is set to one when the CEO simultaneously holds the position of chairperson of the board of directors at firm i during year t, and it is set to zero otherwise
${LOSS}_{it - 1}$	indicator equal to 1 if operating incomes of firm i in both years t−1 and t−2 are negative, and zero otherwise
${SIZE}_{it - 1}$	firm size, which is log of total assets
${AGE}_{it - 1}$	firm age, which is the number of years that firms appear in the database
${Z_SCORE}_{it}$	$= 3.3 x \frac{{Net income}_{i, t}}{{Total asset}_{i, t - 1}} + 1.0 x \frac{{SALES}_{i, t}}{{Total asset}_{i, t - 1}} + 1.4 x \frac{{Retained Earnings}_{i, t}}{{Total asset}_{i, t - 1}} + 1.2 x \frac{{Working capital}_{i, t}}{{Total asset}_{i, t - 1}}$

Source(s): The table is created by authors