Variables

Definitions

Fee

Audit fees, the natural logarithm of fees paid to accounting firms responsible for domestic audit reports (excluding indirect expenses such as travel expenses).

Treat

Indicator for heavy polluting companies.

Post

Indicator for year.

DID

Product of experimental variable and time variable.

Law

The indicator for the rank of development of the intermediary organization in market and the rule of law environment. If the ranking is less than the median, the ranking is taken as 1, otherwise it is 0.

Reg

The quotient of the investment in regional industrial pollution control divided by the regional industrial added value. If the environmental regulation is greater than the median, take 1; otherwise, 0.

Switch

The indicator for changing the accounting firm in the current year. If the listed company change CPA, the value is 1; otherwise, the value is 0.

SOE

The indicator for state-owned companies. If the listed company elongs to the state-owned company, the value is 1; otherwise, the values are 0.

Opinion

The indicator for auditing opinion. If the value is unqualified opinion, the value is 0; otherwise, the value is 1.

ROA

The return on total assets is equal to the net profit divided by the average balance of total assets, where the average balance of total assets is the average of the ending balance of the total assets and the opening balance of the total assets.

Quick

The indicator for liquidity ratio.

Lev

The indicator for asset-liability ratio.

Size

The indicator for enterprise size, which is the natural logarithm of total assets at the end of the year.

Loss

The indicator for Profitability. If the enterprise suffered a loss for the year, the value is 1; otherwise, the value is 0.

Big4

The indicator for Big 4 auditors. If the company hired a Big 4 accounting firm that year, the value is 1; otherwise, the value is 0.

Sub

The indicator for Business complexity, which equals to the square root of the number of corporate subsidiaries.

MB

Quotient of a company’s year-end book value divided by market value