INV

Investing level

(Cash payments to purchase property, plant, and equipment, intangible assets and other long-term assets in year t ? cash recovered from disposing property, plant, and equipment, intangible assets and other long-term assets in year t)/total assets

Growth_t−1

Growth

Tobin’s Q of year t − 1 = market value/book value

Lev_t−1

Leverage level

Assets-liability ratio at the end of year t − 1

Cash_t−1

Cash level

(Cash at the end of year t − 1 + short-term investment and trading financial asset at the end of year t − 1)/total assets at the end of year t − 1

Age_t−1

Listed years

The natural logarithm of the corporation’s age of listing at the end of year t − 1

Size_t−1

Size

The natural logarithm of the corporation’s total assets at the end of year t − 1

Ret_t−1

Stock returns

Corporation’s stock returns in year t without cash dividends reinvestment

INV_t−1

Investing level

(Cash payments to purchase property, plant, and equipment, intangible assets and other long-term assets in year t − 1 ? cash recovered from disposing property, plant, and equipment, intangible assets and other long-term assets in year t − 1)/total assets at the end of year t − 1

Industry

Industry

20 dummy variables in total, based on the Industry Classification Standard from China Securities Regulatory Commission

Year

Year

6 dummy variables in total

Overinv

Overinvestment

Regression residual from model 1

Fcf

Free cash flow

Net income + interest cost + non-cash payment − operating capital added − capital payment

Fincf

Financial cash flow

Net cash flow from financial activities in year t/total assets at the end of the year t − 1

ID

Number of independent directors

Number of independent directors in year t

Exp

Management expenses ratio

Management expenses in year t/total assets in year t

EVA

Timing of EVA implementation

=1 if the corporation has implemented the EVA performance appraisal.

=0 if else.

TQ

Sample group by growth

=1 if the corporation’s Tobin’s Q Value was larger than the median;

=0 if the corporation’s Tobin’s Q Value was less than the median.