Variable name | Expected direction | Definition and measurement | ||||
Dependent variable | ||||||
R&D expenditures | RD |
| log(R&D expenses + (Stage t − Stage t − 1) developing intangibles assets) | |||
Book Intangible Assets | IA |
| log(book intangible assets − goodwill − developing intangible assets). | |||
Advertising Expenses | ADV |
| log(book advertising expenses). | |||
Independent variable | ||||||
Degree of separation between control rights and earnings distribution rights | SEP | Positive/ negative | log(control over the board of directors /earnings distribution right). | |||
Number of independent directors | ID | Positive | log(number of independent directors). | |||
Control variable | ||||||
Debt ratio | DEBT | Negative | log(total ending liabilities/total ending assets). | |||
Corporate size | SIZE | Positive | log(number of employees). | |||
Free cash flow | FCF | Positive | log[(cash flow of operating activities − cash dividends of preferred shares − cash dividends of common shares)/total ending assets]. | |||
Market type | MARKET | Positive | If the corporate is a listed company, the value is 1, otherwise it is 0. | |||