Note(s): Ordinary Least Squares (OLS) regression model, t-statistics calculated based on the robust standard errors clustered at firm-level. Over-investment in labor (OVER_LAB_it) in firm i occurs when the ratio of the number of employees at the end of financial year t to the annual sales of firm i during year t is greater than the ratio of the total number of employees of all firms in the same industry sector in year t to the total annual sales for all firms in the same industry sector in year t. In the sub-sample of over-investment in labor, a higher (lower) positive number indicates a higher (lower) over-investment in labor. The presence of PCBs is a dummy variable set to 1 if a firm has politically-connected board member(s) and zero (0) otherwise. Columns 1, 2, 3 and 4 report the coefficients and t-statistic values of the interaction between PCBs_it and SB_TENR_it (SB’s optimal tenure). SB_TENR_it is a dummy variable set to 1 if the average of SB tenure of firm i in year t is between 5–10 years (Columns 1 and 2) or 8–11 years (Columns 3 and 4) and zero (0) otherwise. t-values are reported in parentheses. *, **, and *** indicate statistical significance at the 10, 5 and 1% levels, respectively (two-tailed). The definitions of variables are presented in  Appendix

Source(s): Table 5 by authors