Variable definitions
| Variable(s) | Label | Description | Source |
|---|---|---|---|
| Dependent variable | |||
| Firm performance | TOBINSQ | The sum of the market value of equity plus the book value of total debt scaled by total assets | Thomson Reuters Eikon (and calculated) |
| Independent variable(s): | |||
| CEO tenure | CEO_TENURE | Number of years the CEO has been serving as the firm’s CEO | Annual reports (hand collected) |
| Ln(CEO_TENURE) | Annual reports (and calculated) | ||
| Control variables | |||
| CEO age | CEO_AGE | Firm CEO’s age measured in years | Annual reports (hand collected) |
| CEO gender | CEO_GENDER | Indicator variable that equals 1 if the CEO’s gender is female and 0 otherwise | Annual reports (hand collected) |
| CEO founder | CEO_FOUNDER | Indicator variable that equals 1 if the CEO is the founder of the company and 0 otherwise | Annual reports (hand collected) |
| CEO duality | CEO_DUAL | Indicator variable that equals 1 if the CEO is also the Chairman of the board and 0 otherwise | Annual reports (hand collected) |
| Firm size | SIZE | Natural logarithm of total assets | Thomson Reuters Eikon (and calculated) |
| Leverage | LEV | Total debt divided by total assets | Thomson Reuters Eikon (and calculated) |
| Profitability | LOSS | Indicator variable that equals 1 if the firm reported loss and 0 otherwise | Thomson Reuters Eikon (and calculated) |
| Year fixed effects | YEAR_FE | A vector of dummy variables indicating year | Thomson Reuters Eikon |
| Industry fixed effects | INDUSTRY_FE | A vector of dummy variables indicating industry | Thomson Reuters Eikon |
| Additional test variables: | |||
| Return on assets | ROA | Net income divided by total assets | Thomson Reuters Eikon (and calculated) |
| Basic earning power ratio | BEP | The ratio of earnings before interest and tax (EBIT) to total assets reported in a financial year | Thomson Reuters Eikon (and calculated) |
| Market competition | HHI | A proxy of market competition based on the Herfindahl-Hirschman Index and the value range between 0 and 100 | Thomson Reuters Eikon (and calculated) |
| Audit quality | BIG4 | An Indicator variable that equals 1 if the firm is audited by BIG4, and 0 otherwise | Thomson Reuters Eikon and annual report (and calculated) |
| Firm age | New/OLD | Number of years since the company is founded. We categorize firms into two groups – new and old – based on the mean age of firms in the sample | Thomson Reuters Eikon and annual report (and calculated) |
| Firm life cycle | MATURE | Firm Life Cycle is measured as a ratio of retained earnings (RE) scaled by total assets (TA). A value greater than 1 is a mature firm, 0 otherwise | Thomson Reuters Eikon (and calculated) |
| Variable(s) | Label | Description | Source |
|---|---|---|---|
| Firm performance | TOBINSQ | The sum of the market value of equity plus the book value of total debt scaled by total assets | Thomson Reuters Eikon (and calculated) |
| CEO tenure | CEO_TENURE | Number of years the CEO has been serving as the firm’s CEO | Annual reports (hand collected) |
| Ln(CEO_TENURE) | Annual reports (and calculated) | ||
| CEO age | CEO_AGE | Firm CEO’s age measured in years | Annual reports (hand collected) |
| CEO gender | CEO_GENDER | Indicator variable that equals 1 if the CEO’s gender is female and 0 otherwise | Annual reports (hand collected) |
| CEO founder | CEO_FOUNDER | Indicator variable that equals 1 if the CEO is the founder of the company and 0 otherwise | Annual reports (hand collected) |
| CEO duality | CEO_DUAL | Indicator variable that equals 1 if the CEO is also the Chairman of the board and 0 otherwise | Annual reports (hand collected) |
| Firm size | SIZE | Natural logarithm of total assets | Thomson Reuters Eikon (and calculated) |
| Leverage | LEV | Total debt divided by total assets | Thomson Reuters Eikon (and calculated) |
| Profitability | LOSS | Indicator variable that equals 1 if the firm reported loss and 0 otherwise | Thomson Reuters Eikon (and calculated) |
| Year fixed effects | YEAR_FE | A vector of dummy variables indicating year | Thomson Reuters Eikon |
| Industry fixed effects | INDUSTRY_FE | A vector of dummy variables indicating industry | Thomson Reuters Eikon |
| Return on assets | ROA | Net income divided by total assets | Thomson Reuters Eikon (and calculated) |
| Basic earning power ratio | BEP | The ratio of earnings before interest and tax (EBIT) to total assets reported in a financial year | Thomson Reuters Eikon (and calculated) |
| Market competition | HHI | A proxy of market competition based on the Herfindahl-Hirschman Index and the value range between 0 and 100 | Thomson Reuters Eikon (and calculated) |
| Audit quality | BIG4 | An Indicator variable that equals 1 if the firm is audited by BIG4, and 0 otherwise | Thomson Reuters Eikon and annual report (and calculated) |
| Firm age | New/OLD | Number of years since the company is founded. We categorize firms into two groups – new and old – based on the mean age of firms in the sample | Thomson Reuters Eikon and annual report (and calculated) |
| Firm life cycle | MATURE | Firm Life Cycle is measured as a ratio of retained earnings (RE) scaled by total assets (TA). A value greater than 1 is a mature firm, 0 otherwise | Thomson Reuters Eikon (and calculated) |
Source(s): Authors’ calculation
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