Notations

Name of variable

Definitions

Stock excess return

Stock return minus benchmark portfolio return

C

Cash holdings

Cash and short-term investments

Beta

Risk of predation

The coefficient on industry returns in a model that regresses firm monthly stock return on market return and industry return.

MV

Market value of equity

Market value of equity, equal year-end number of common shares outstanding times stock price

E

EBITDA

Earnings before interest & tax plus depreciation and the amortization

R&D

Research & development

Research and development expense

NA

Net asset

Total assets minus cash and short-term investments

L

Leverage

The sum of interest-bearing short-term debt and long-term debt

NF

Net Financing

equity issuance plus debt issuance minus debt redemption

I

Interest

Interest expense

D

Divided

Dividend payment