Table A1 Definitions of variables...

Table A1

Definitions of variables

Variable		Definition
CEO_TURN	CEO turnover	Indicator variable coded as 1 if a firm experienced a CEO turnover event during the year t, and 0 otherwise
FF	Family firm	Indicator variable equal to 1 if a firm is classified as a family firm, and 0 otherwise
TRANS	Corporate transparency	A composite index of corporate transparency based on the factor score obtained from the principal component analysis (PCA) of four variables: analyst forecast error (AFERROR), analyst forecast dispersion (AFDISP), analyst coverage (ANALYST) and bid–ask spread (SPREAD)
SIZE	Firm size	Natural logarithm of total assets at the beginning of the year
LEV	Leverage	Ratio of total debt to total assets
ROA	Profitability	Ratio of net profit to total assets at the beginning of the year
BM	Growth opportunities	Ratio of the book-to-market value of equity
RET	Stock return	Annualized stock returns
SGROWTH	Sales growth	Percentage change in annual revenue
CFO	Cash flow performance	Ratio of operating cash flow to total assets
STD_CFO	Cash flow volatility	Three-year rolling standard deviation of operating cash flows
FAGE	Firm age	Natural logarithm of the number of years since a firm’s founding
EMPTURN	Employee turnover	Percentage of employee turnover in a year
BLOCK	Block ownership	Percentage of ownership held by block owners
BSIZE	Board size	Natural logarithm of board size
BIND	Board independence	Percentage of independent members on the board of directors
CEO_DUAL	CEO duality	Indicator variable that takes a value of 1 if the chairman and CEO are the same person, and 0 otherwise
CEO_GENDER	CEO gender	Indicator variable that takes a value of 1 if the CEO is male, and 0 otherwise
CEO_OWN	CEO ownership	Percentage of stock ownership held by the CEO of a firm
VOLAT	Return volatility	Annualized standard deviation of daily stock returns for each firm. This measure reflects the variability in stock performance over the year
SEGMENT	Business segments	Natural logarithm of the total number of business segments of a firm
HHI	Industry competition	The Herfindahl–Hirschman Index (HHI) is calculated as the sum of squared market shares of all firms within an industry. A higher HHI indicates lower competition
ΔIND_VOL	Industry-level stock return volatility changes	Average change in stock return volatility for each industry, where stock return volatility is calculated as the standard deviation of daily stock returns over the financial year
RND	Research and development	Ratio of research and development (R&D) expenditure to total revenue
TURN	Share turnover	Average monthly share trading volume relative to the total number of outstanding shares
ANA_SHOCK	Exogenous shock to analyst coverage	An indicator variable that takes the value of 1 for the years after 2012 and 0 for the years before 2011
TAX_AVOID	Tax avoidance	The ratio of total income tax expense to pre-tax book income. Since higher ETR values indicate less tax avoidance, we multiply ETR by minus one (−1) so that higher values correspond to greater tax avoidance. We truncate ETR to a range between 0 and 1 and treat it as missing when the denominator is zero or negative

Variable		Definition
CEO_TURN	CEO turnover	Indicator variable coded as 1 if a firm experienced a CEO turnover event during the year t, and 0 otherwise
FF	Family firm	Indicator variable equal to 1 if a firm is classified as a family firm, and 0 otherwise
TRANS	Corporate transparency	A composite index of corporate transparency based on the factor score obtained from the principal component analysis (PCA) of four variables: analyst forecast error (AFERROR), analyst forecast dispersion (AFDISP), analyst coverage (ANALYST) and bid–ask spread (SPREAD)
SIZE	Firm size	Natural logarithm of total assets at the beginning of the year
LEV	Leverage	Ratio of total debt to total assets
ROA	Profitability	Ratio of net profit to total assets at the beginning of the year
BM	Growth opportunities	Ratio of the book-to-market value of equity
RET	Stock return	Annualized stock returns
SGROWTH	Sales growth	Percentage change in annual revenue
CFO	Cash flow performance	Ratio of operating cash flow to total assets
STD_CFO	Cash flow volatility	Three-year rolling standard deviation of operating cash flows
FAGE	Firm age	Natural logarithm of the number of years since a firm’s founding
EMPTURN	Employee turnover	Percentage of employee turnover in a year
BLOCK	Block ownership	Percentage of ownership held by block owners
BSIZE	Board size	Natural logarithm of board size
BIND	Board independence	Percentage of independent members on the board of directors
CEO_DUAL	CEO duality	Indicator variable that takes a value of 1 if the chairman and CEO are the same person, and 0 otherwise
CEO_GENDER	CEO gender	Indicator variable that takes a value of 1 if the CEO is male, and 0 otherwise
CEO_OWN	CEO ownership	Percentage of stock ownership held by the CEO of a firm
VOLAT	Return volatility	Annualized standard deviation of daily stock returns for each firm. This measure reflects the variability in stock performance over the year
SEGMENT	Business segments	Natural logarithm of the total number of business segments of a firm
HHI	Industry competition	The Herfindahl–Hirschman Index (HHI) is calculated as the sum of squared market shares of all firms within an industry. A higher HHI indicates lower competition
ΔIND_VOL	Industry-level stock return volatility changes	Average change in stock return volatility for each industry, where stock return volatility is calculated as the standard deviation of daily stock returns over the financial year
RND	Research and development	Ratio of research and development (R&D) expenditure to total revenue
TURN	Share turnover	Average monthly share trading volume relative to the total number of outstanding shares
ANA_SHOCK	Exogenous shock to analyst coverage	An indicator variable that takes the value of 1 for the years after 2012 and 0 for the years before 2011
TAX_AVOID	Tax avoidance	The ratio of total income tax expense to pre-tax book income. Since higher ETR values indicate less tax avoidance, we multiply ETR by minus one (−1) so that higher values correspond to greater tax avoidance. We truncate ETR to a range between 0 and 1 and treat it as missing when the denominator is zero or negative

Source(s): Authors' own work

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