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 − salest−1)/salest−1

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