Variable | Definition |
Explained variable | |
possibility of future losses for the company—later_lossi,i+1 | If the company’s profit margin before interest and tax for t + 1 period is less than 0, it is 1, otherwise it is 0; |
audit fee—ln_auditfeei,i | The logarithm of audit fees for period t of the enterprise; |
Explanatory variables | |
Cost stickiness—dcscosti,i | Calculated using the formulas (1) and (2) above; |
Control variable | |
Enterprise size—size | Logarithm of total assets of the enterprise; |
Assets and liabilities—lev | Corporate liabilities/total corporate assets; |
Business complexity—cfratio | (Receivable + inventory)/total assets; |
growth rate—growth | (Net profit for the current year-Net profit for the previous year)/Net profit for the previous year; |
a loss occurred in t years—loss | 1 if the enterprise incurred a loss in year t; otherwise, 0; |
Shareholding ratio of major shareholders—ownership | Number of shares held by the largest shareholder/total capital of the company; |
Executive Shareholding—stock_e | Number of shares held by executives/total number of shares; |
same | Same is 1 if the general manager and the chairman are the same person, otherwise 0; |
Independent director ratio—EID | Number of independent directors/boards; |
big4 | If the accounting firm is the Big Four, the value of big4 is 1, otherwise it is 0; |
audit opinion—audittype | At period t, if the audit opinion is non-standard, the value is 1, otherwise it is 0; |