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Table 4 Measurements of the variables

From: The effects of managerial ability on firm performance and the mediating role of capital structure: evidence from Taiwan

Variable

Abbreviation

Measurements

Input and output for efficiency

Number of employees

EMP

Number of employees

Cost of goods sold

COGS

Cost of goods sold

Operating expenses

OPEX

Operating expenses, comprising selling, general, and administrative expenses

Property, plant, and equipment, i.e., fixed assets

Property, plant and equipment

PPE

Total revenue received from selling goods in the normal operations of a firm

Goodwill and intangibles

GW&Intan

Goodwill and intangibles

Market-based value

MV

Market value

Sales

Sales

Revenues generated from sales of goods and services

First stage: Firm-specific factors on firm efficiency

Dependent variable

 Technical efficiency

TE

Firm efficiency from DEA StoNED

Independent variables

 Firm size

lnTA

The natural logarithm of total assets

 Market share

MKTSHR

The ratio of a firm’s sales to the overall sales of the industry by year

 Free cash flow dummy

FCFD

Dummy variable equal to one if a firm has a positive free cash flow, and zero otherwise

 Firm age

lnAGE

The natural logarithm of the number of years of listing

 Business segment

BUSSEG

The ratio of a firm’s business segment’s sales to its total sales across all business segments

 Board size

BSIZE

The number of directors on board

Second stage: Managerial ability, capital structure and firm performance

Firm performance

 Tobin Q

TBQ

Market value divided by total assets

Return on assets

ROA

Earnings divided by total assets

 Managerial ability 1

MA1

Managerial ability derived from DDF based StoNED

 Managerial ability 2

MA2

Dummy variable equal to one if a CEO’s salary is greater than the median value of all CEOs’ salaries by year, and zero otherwise

Capital structure

 Market-valued leverage ratio

MLR

(Short-term debt + long-term debt)/(total debt + market capitalisation)

 Market-valued leverage ratio

BLR

(Short-term debt + long-term debt)/total assets

Control variables

 Tangibility

TANG

Fixed assets divided by total assets

 Firm age

FAGE

The natural logarithm of the number of years a firm has been listed

 Volatility

Vol

The standard deviation of profitability by year

 Median market-valued leverage ratio

MedMLR

Dummy variable equal to one if a firm’s MLR is greater than the median value of all firms’ MLR by year, and zero otherwise

 Median book-valued leverage ratio

MedBLR

Dummy variable equal to one if a firm’s BLR is greater than the median value of all firms’ BLR by year, and zero otherwise

 Board independence

BIND

The proportion of independent directors to total directors

 Board shareholdings

BShares

The percentage of common stock held by board of directors

 Institutional ownership

INSTOWN

The percentage of common stock held by institutional organisations