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 |