109 NTU Management Review Vol. 31 No. 1 Apr. 2021 Appendix Table A The Table of Variable Definitions Variable Definition MA A dummy variable that equals to one if the firm undertakes an acquisition, otherwise zero. Vega The change in the dollar value of the CEO’s options holdings for one percentage change in the stock return volatility. Delta The change in the dollar value of the CEO’s stock and options holdings for one percentage change in the stock price. Cash/TA Cash and short-term investments scaled by total assets. Cashrich An indicator that equals to one if the firm owns excess cash holdings, otherwise zero. Excess cash holdings are defined as cash ratios (Cash/TA) minus predicted cash ratios. The predicted cash ratio is estimated by the modified cash model, which is based on the model of Bates et al. (2009) and takes into account net financing. Sales The logarithm of sales in 1990 dollars. Market leverage The book value of debt over the market value of total capital. Book debt is calculated by total assets minus book equity. Book equity is defined as total assets minus liabilities plus balance sheet deferred taxes and investment tax credit minus preferred stock. Market value of capital is defined as liabilities minus balance sheet deferred taxes and investment tax credit plus preferred stock plus market value of common equity. Stock return A firm’s annual stock returns. Market_to_Book The market value of assets over the book value. EBITDA/TA The ratio of operating income before depreciation over total assets. Industry M&A liquidity The ratio of overall M&A transaction values divided by total assets of all COMPUSTAT firms with the same three-digit SIC code for each signal year. Herfindahl index The sum of the squares of market shares for all firms sharing the same three-digit SIC code. Market shares are estimated by sales of a firm over total sales within the same industry. InsideOwn The percentage of insider ownership, which is measured as the ratio of shareholdings owned by top-five managers.
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