Table 3 Variable definition.
Variable types | Variable name | Variable symbol | Variable description |
|---|---|---|---|
Explained variable | Inefficient investment | Inefficient | Residuals from Model (1); positive values indicate over-investment, negative values denote under-investment. |
Explanatory variable | Digital transformation | Digital | Referring to the corporate digital transformation index system in Table 1. |
Moderating variables | Diversified operations | Dyh | Adjusted Herfindahl-Hirschman Index in Model (2), higher values reflect greater corporate diversification. |
Environmental uncertainty | EU | Enterprise perception of politico-economic uncertainty; employing a Python-based web crawler to MD&A sections; The lexicon scope is detailed in Table 2; higher values indicate elevated uncertainty. | |
Control variables | Big Four audit | Big4 | Dummy variable: 1 if audited by a Big Four accounting firm, 0 otherwise. |
CEO-chair duality | Dual | Dummy variable: 1 if CEO and board chair roles are held by the same individual, 0 otherwise. | |
Leverage ratio | Lev | Total liabilities divided by total assets. | |
Return on assets | Roa | Net profit divided by total assets. | |
Largest shareholder ownership | Top1 | Largest shareholder’s equity stake divided by total shares. | |
Revenue growth rate | Growth | (Current revenue - Prior revenue)/ Prior revenue | |
Operating cash flow | Cfo | Net operating cash flow divided by total assets. | |
Board size | Board | Natural logarithm of the number of directors. | |
Firm age | Firmage | Natural logarithm of (years since incorporation + 1). | |
Independent director ratio | Indep | Independent directors divided by total board seats. | |
Industry | Ind | Dummy variable, controlling for industry fixed effects | |
Year | Year | Dummy variable, controlling for year fixed effects |
