Variable

Definition

Measurement

Dependent variable

ABSDA:

Absolute Discretionary Accruals

Absolute Discretionary Accruals represent an unsigned Earnings Management proxy estimated by the Modified Jones Model

Explanatory variables

INDEP:

Board independence

Proportion of non-executive directors over the total number of directors

FAMILY:

Family directors

Proportion of family directors over the total number of directors

FEMALE:

Female directors

Proportion of female directors over the total number of directors

FOREIGN:

Foreign directors

Proportion of foreign directors over the total number of directors

DUALITY:

CEO duality

Dummy variable (1 if the chief executive officer is also chairman of the board, 0 otherwise)

Control variables

BIG4:

Audit firm size

Dummy variable (1 if audit firm is a Big4 firm, 0 otherwise)

LEV:

Leverage

Ratio of (Total Long-Term Debt + Debt in Current Liabilities)/Total Assets

ROA:

Return On Assets

Income Before Extraordinary Items to Total Assets

SIZE:

Firm size

Total assets (logarithm)