Variable | Explanation | Source |
CSP | As a general measure of the corporate social performance in the paper, I form it by adding up scaled KLD net scores in SOCRATES database across all 7 dimensions: product quality and safety, environment, employee relations, corporate governance, diversity and community relations. I further scale the sum by the number of scored dimensions each year for the empirical analysis. | KLD Research & Analytics, Inc. |
AT | Logarithmic total assets | Computstat |
MB | Market value of equity/book value of equity | Computstat |
LEVERAGE | Long-term debt/(total debt + market value of equity) | Compustat |
PP & E | Fixed assets/total assets | Compustat |
R & D | Firm size adjusted research and development expense | Compustat |
ROA | Net Income/total assets | Compustat |
ADV | Advertising expenses scaled by total assets | Compustat |
EXACCR | Proxy for the firm’s willingness to engage in earnings management. The proxy is calculated by subtracting the average level of accruals used by the firm’s industry from the level of accruals scaled by the firm’s total assets, in which accruals are defined as the difference between net income and cash from operations. | Compustat |
MTR | Marginal tax rate is the amount of tax paid on one more dollar of income, which is the proxy for the cost of investment in CSR in terms of after-tax dollars. | Via the website of John Graham |
HHI | The Herfindahl-Hirschman index is a proxy for market complexity (e.g., | Compustat |
COEFF | The coefficient of regressing logarithmic industry sales on the fiscal year, using data of every five years (e.g., | Compustat |
STD | This is the standard error of the coefficient generated from the above regression, which is a proxy for market dynamism. | Compustat |