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臺大管理論叢
第
27
卷第
1
期
379
members, and the value of 0 otherwise.
EQUCOMP =
α+β
1
FREE_TOBIN+β
2
OVERLAP_AUCOMP+β
3
OTHER_EXE+β
4
INGOV+β
5
EXGOV+β
6
CASHCOMP+β
7
BOARDSIZE+β
8
LNSALES+β
9
LIQ_CONSTRAINTS+β
10
STOCK_
RETURN+β
11
R&D+INDUSTRY DUMMIES+ε
(5)
Variable definitions are summarized in Table 2.
Table 2 Variable Definitions
Variable
Expected
Sign
Variable Definition
Dependent Variable
EQUCOMP
A dummy variable equal to 1 if the company grants equity-based
compensation to at least one of its audit committee members, and 0
otherwise.
Independent
Variables
FREE_TOBIN
-
Interaction between the company’s free cash flow and its growth
opportunity, proxied by
Tobin’s Q
.
Tobin’s Q
is coded to 1 if it is
smaller than the industry median in the year, and 0 otherwise
OVERLAP_
AUCOMP
+
The number of overlapping audit and compensation committee
members divided by the number of compensation members
OTHER_EXE
-
The number of audit committee members receiving compensation
from other firms divided by the number of audit committee members
INGOV
?
The sum of the
CEO chair dummy
and the
CEO ownership dummy
.
The
CEO chair dummy
is a dummy variable that equals 1 if the CEO
is not the board chair and 0 otherwise. The
CEO ownership dummy
is a dummy variable that takes the value of 1 if the CEO ownership
share is lower than the median for the year across CEOs in the
sample and 0 otherwise. A larger number means better internal
governance
EXGOV
?
The sum of the scores of
Coverage
and
InsOwn
.
Coverage
means
the natural logarithm of the number of analysts following for the fiscal
year.
InsOwn
represents the institutional holding for the firm. These
two variables are ranked, divided into ten groups, scored from 10
(highest) to 1 (lowest) and added up. Higher number means better
external governance
CASHCOMP
-
Proportion of cash retainer to total compensation of the audit
committee
BOARDSIZE
? The number of directors on the board
LNSALES
? Natural logarithm of the company sales revenue of the year