Appendix: Definition of variables This appendix reports the definition and acronym of variables and expected relations with earnings management measures. Expected Variable Acronym Definition relation The difference between net income and Total accruals ACC cash flow from operations divided by asset Discretionary DACC The residual of Jones (1991) model accruals A dummy variable that equals 1 if the Politically PCEO - chairman of the board is politically connected CEO connected A dummy variable that equals 1 if the CEO Gender CEO Gender + chairman of the board is male Natural log of the age of the chairman CEO Age CEO Age - of the A dummy variable that takes the value 1 if CEO Duality CEO Duality + the chairman of the board and the general manager is the same person Natural log of total assets Firm Size Firm Size + Leverage Leverage + Total liabilities to total assets Natural log of the total number of Board Size Board Size +/- directors on board The number of independent director to the Board Board - number of directors on board Independence Independence Multiple legal A dummy variable that equals 1 if firm HBshare - environment also issue H share or B share Largest Percentage of shares held by the largest shareholder Concentration + shareholder ownership Other controlling Sum of percentage of shares held by the shareholders SHARE2_10 - 2nd to 10th shareholders ownership A dummy variable that equals 1 if the Seasoned Equity SEO + observation year is any three years prior to Offering a SEO
Appendix: Definition of variables This appendix reports the definition and acronym of variables and expected relations with earnings management measures. Variable Acronym Expected relation Definition Total accruals ACC The difference between net income and cash flow from operations divided by asset Discretionary accruals DACC The residual of Jones (1991) model Politically connected CEO PCEO - A dummy variable that equals 1 if the chairman of the board is politically connected CEO Gender CEO Gender + A dummy variable that equals 1 if the chairman of the board is male CEO Age CEO Age - Natural log of the age of the chairman of the CEO Duality CEO Duality + A dummy variable that takes the value 1 if the chairman of the board and the general manager is the same person Firm Size Firm Size + Natural log of total assets Leverage Leverage + Total liabilities to total assets Board Size Board Size +/- Natural log of the total number of directors on board Board Independence Board Independence - The number of independent director to the number of directors on board Multiple legal environment HBshare - A dummy variable that equals 1 if firm also issue H share or B share Largest shareholder ownership Concentration + Percentage of shares held by the largest shareholder Other controlling shareholders ownership SHARE2_10 - Sum of percentage of shares held by the 2nd to 10th shareholders Seasoned Equity Offering SEO + A dummy variable that equals 1 if the observation year is any three years prior to a SEO
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