| Variables | Description | Compustat items |
| Total investment | Capital expenditures plus R&D scaled by the lagged book value of total assets | capx, xrd, at |
| Leverage | Long term and current debt scaled by the book value of total assets | dllt, dlc, at |
| Cash flow | Cash flow from operations by the lagged value of total assets | oancf, at |
| Growth opportunities | Net sales growth calculated (salest â salestâ1)/salestâ1 | sale |
| Capital expenditures | Capital expenditures scaled by the lagged book value of total assets | capx, at |
| Payout reduction | Cash dividends in year t minus dividends in year t | dvc |