| Variable | Definition |
| Inventory | The average of the net inventory at the end of the year and at the beginning of the year/total assets at the end of the year |
| Inturnover | Main business cost at the end of the year/(year-end inventory + beginning stock)/2 |
| CGP1 | Customer geographic proximity calculated by city |
| CGP2 | Customer geographic proximity calculated by province |
| Ownership | =1 if firm is a state-owned enterprise; =0 otherwise |
| CHHI | the Herfinda Index, calculated by the company’s sales of the top five customers, |
| Gross | (Main business income of the year − main business cost of the year)/main business income of the year |
| Growth | (Main business income of the year − main business income of the previous year)/main business income of the previous year |
| Sales volatility | The standard deviation of company’s main business income in the current year and the previous two years divided by the average total assets |
| CI | The company’s fixed assets/the main business income of the year |
| Firm age | The natural log of the number of years since the firm gets listed in the stock market plus 1 (calculated on a monthly basis) |
| Leverage | Total liabilities of the company at the end of the year/ total assets at the end of the year |
| ROA | The company’s net profit for the year/total assets at the end of the year |
| Loss | If the company has a loss in the current year, take 1; otherwise it is 0 |
| Size | The natural logarithm of the total assets of the company at the end of the year |