Table A1 Variable definitions Variables... | Emerald Publishing

Table A1

Variable definitions

Variables	Symbols	Details
Dependent variable
Dividend smoothing	AD_DIV	Fliers (2019) show that managers tend to dividend uniformity. The previous dividend levels and current earnings assess the current fluctuate in dividends. The optimal level of firm’s dividends (Div) is given by ${Div}_{t}^{} = r E_{t}$ (1) where E_t is the current earnings of the firm and r is the standard payout ratio of the firm. Fliers (2019) show that based on high risk of dividend decrease, fluctuate in dividends will be imperceptible. So, we estimate the Fliers (2019) following partial adjustment model: ${Div}_{t}^{} = β_{0} + β_{1} E_{t} + β_{2} {Div}_{t - 1} + ϵ (2)$ where Div*_t is the dividends’ changes. The target payout ratio of firms is determine by $\frac{β_{1}}{β_{2}}$ ⁠, and the dividend speed of adjustment is determine by ${- β}_{2}$
Independent variable
Manager overconfidence	Overconfidence	Is dummy variable that equal to one in case the capital expenditures in a given year is more than the middle level of industry capital expenditures for that year, otherwise zero
Accounting competence	Acc_Competence	Accounting competence is a virtual variable that takes the value of one if the president; any corporate vice president in charge of the major business division, unit, or function; any other manager who performs a decision-making tasks; or any other individual who performs same decision-making tasks, has previous audit experience as a partner or manager in an audit firm, and zero otherwise
Control variables
Firm Size	Size	Natural logarithm of the total assets’ book value
Market to book ratio	MTB	The market value to book value of firm’s total assets
Leverage	Lev	Total debts divided by total assets
Return of assets	ROA	Income before extraordinary items scaled by lagged total assets
Institutional ownership	Inst	The sum of institutional ownership’ percentage
Managerial ownership	Mgt	The percentage of the shares owned by the managers
Board size	B_Size	The number of the board of directors
Board independence	B_Ind	The cumulative percentage of the largest shareholder ownership for each sample firm at year end
LOSS	LOSS	Is an indicator variable equal to one for firm-years with negative income before extraordinary items of t and t−1 years, otherwise zero
Standard deviation of return	Ret_Std	The standard deviation of stock returns over the three past years
Standard deviation of cash flow of operation	Cfo_Std	The standard deviation of operating cash flow over the three past years
Environmental uncertainty	VIX	The standard deviation of profitability changes over three years

Variables	Symbols	Details
Dependent variable
Dividend smoothing	AD_DIV	Fliers (2019) show that managers tend to dividend uniformity. The previous dividend levels and current earnings assess the current fluctuate in dividends. The optimal level of firm’s dividends (Div) is given by ${Div}_{t}^{} = r E_{t}$ (1) where E_t is the current earnings of the firm and r is the standard payout ratio of the firm. Fliers (2019) show that based on high risk of dividend decrease, fluctuate in dividends will be imperceptible. So, we estimate the Fliers (2019) following partial adjustment model: ${Div}_{t}^{*} = β_{0} + β_{1} E_{t} + β_{2} {Div}_{t - 1} + ϵ (2)$ where Div_t is the dividends’ changes. The target payout ratio of firms is determine by $\frac{β_{1}}{β_{2}}$ , and the dividend speed of adjustment is determine by ${- β}_{2}$
Independent variable
Manager overconfidence	Overconfidence	Is dummy variable that equal to one in case the capital expenditures in a given year is more than the middle level of industry capital expenditures for that year, otherwise zero
Accounting competence	Acc_Competence	Accounting competence is a virtual variable that takes the value of one if the president; any corporate vice president in charge of the major business division, unit, or function; any other manager who performs a decision-making tasks; or any other individual who performs same decision-making tasks, has previous audit experience as a partner or manager in an audit firm, and zero otherwise
Control variables
Firm Size	Size	Natural logarithm of the total assets’ book value
Market to book ratio	MTB	The market value to book value of firm’s total assets
Leverage	Lev	Total debts divided by total assets
Return of assets	ROA	Income before extraordinary items scaled by lagged total assets
Institutional ownership	Inst	The sum of institutional ownership’ percentage
Managerial ownership	Mgt	The percentage of the shares owned by the managers
Board size	B_Size	The number of the board of directors
Board independence	B_Ind	The cumulative percentage of the largest shareholder ownership for each sample firm at year end
LOSS	LOSS	Is an indicator variable equal to one for firm-years with negative income before extraordinary items of t and t−1 years, otherwise zero
Standard deviation of return	Ret_Std	The standard deviation of stock returns over the three past years
Standard deviation of cash flow of operation	Cfo_Std	The standard deviation of operating cash flow over the three past years
Environmental uncertainty	VIX	The standard deviation of profitability changes over three years

Source(s): Author’s own work