Do Women Top Managers Always Mitigate Earnings Management? Evidence from China

Figures & data

Table 1. Variable definitions.

Variable	Definition	Data source
DA	Discretionary (abnormal) accruals using modified Jones model of Dechow et al. (1995)	A’ C based on CSMAR
WMR	The ratio of women top managers, equaling to the number of women top managers scaled by the total number of top managers;	A’H based on CSMAR
REGLIST	The reciprocal value of the average distance between a listed firm and regulatory centres (i.e., Beijing, Shanghai, Shenzhen), multiply 1,000;	A’H based on Google- earth map
BIG4	A dummy variable, equaling to 1 when the auditor is a Big 4 accounting firm (including affiliated firms) and 0 otherwise (Fan & Wong, 2005);	www.cicpa.org.cn
TENURE	The number of years since a client hires an auditor to audit its annual reports;	CSMAR
ANALYST	Analyst coverage, measured as the natural log of (1+the number of analyst coverage);	CSMAR
INSTSHR	The percentage of shares owned by institutional investors;	CSMAR
MKT	Fan et al.’s Marketization Index which measures the whole institution development of each province in China and the investor protection of each region;	Fan et al. (2010)
LNBGS	The natural log of the sum of business, product, and geographic segments minus 2 (Choi et al., 2012);	A’ C based on WIND
CHGSALES	Change in sales deflated by lagged total assets (Choi et al., 2012);	CSMAR
BTM	The ratio of book-to-market;	CSMAR
ISSUE	A dummy variable, equaling 1 if debt and equity issued during the past three years is more than 5% of the total assets, and 0 otherwise (Choi et al., 2012);	A’H based on CSMAR
MZ	According to Altman (1968)’s Z-score, equaling 2 if Z-score is less than 1.80, 1 if Z-score is between 1.80 and 3.00, and 0 otherwise (Omer et al., 2010);	A’ C based on CSMAR
LAGACCR	One-year lagged total accruals, and accruals are calculated as net income before extraordinary items minus operating cash flows deflated by the lagged total assets;	A’ C based on CSMAR
FIRST	The percentage of shares owned by controlling shareholders;	CSMAR
DUAL	An indicator variable, equaling 1 if the CEO and the chairman are the same person, and 0 otherwise;	CSMAR
INDR	The number of independent directors to the total number of the directors in the boardroom;	CSMAR
MANSHR	The percentage of shares owned by a firm’s managers;	CSMAR
BOARD	The natural logarithm of the number of directors in the boardroom;	CSMAR
OCF	Operating cash flows deflated by lagged total assets;	CSMAR
ROA	Return on total assets, measured as earnings before interest and tax deflated by total assets;	CSMAR
SIZE	Firm size, measured by natural log of total assets (Jiang et al., 2010);	CSMAR
LEV	The ratio of total liabilities to total assets (Jiang et al., 2010);	CSMAR
STATE	A dummy variable, equaling to 1 when the ultimate controlling shareholder of a listed firm is a (central or local) government agency or government controlled enterprises and 0 otherwise (Jiang et al., 2010).	CSMAR
DA_ΔCF	Discretionary accruals based on augmented Jones model of Ball and Shivakumar (2006) considering the change of operating cash flow;	A’ C based on CSMAR
DA_RET	Discretionary accruals based on augmented Jones model of Ball and Shivakumar (2006) considering abnormal returns;	A’ C based on CSMAR
DA_PMADJ	Discretionary accruals based on Kothari et al. (2005)’s model;	A’ C based on CSMAR
RM	The sum of the inverse value of abnormal cash flows from operations and abnormal discretionary expenses (Cohen & Zarowin, 2010; Zang, 2011);	A’ C based on CSMAR
LISTAGE	The number of years since firms’ initial public offerings on Chinese A-Share market (Srinidhi et al., 2011);	CSMAR
NONEXEDR	The percentage of non-executive directors, equaling to the number of non-executive directors scaled by the total number of directors on board (Srinidhi et al., 2011);	A’H based on CSMAR
NUMIND	The number of industries from which firms’ sales revenues are generated (Srinidhi et al., 2011);	A’H based on CSMAR
SD	Standard deviation of firms’ daily return over a fiscal year, standardize to a mean of 0 and a standard deviation of 1 (Srinidhi et al., 2011);	A’C based on CSMAR
RET	The annual return of each firm (Srinidhi et al., 2011);	CSMAR
MARRET	The value weighted market value over the corresponding period (Srinidhi et al., 2011);	CSMAR
FEMALE	The ratio of female employees to total employees at the industry level (Srinidhi et al., 2011);	China Statistic Yearbook
GDP_PC	The natural logarithm of GDP per capita at the province level.	China Statistic Yearbook

Notes: A’C: Author’s calculation; A’H: Author’s Hand-collection; CSMAR: China Stock Market and Accounting Research.

Table 2. Sample selection and distribution.

Panel A: Firm-years selection process
Initial observations														17,091
Eliminate observations pertaining to the banking, insurance, and other financial industries														(186)
Eliminate observations that do not meet the criteria that listed for at least 1 year														(1,501)
Eliminate observations whose transaction statuses are ST,*ST or PT														(1,486)
Eliminate observations whose stocks are cross-listed														(1,222)
Eliminate observations whose data required to measure firm-specific control variables are unavailable														(3,169)
Available firm-year observations														10,337
Unique firms														1,437
Panel B: Sample distribution by year and industry
Industry	Code	Year											Total by Industry	%
		2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Agriculture, forestry, husbandry and fishery	A	12	14	21	22	22	21	24	24	25	28	30	243	2.35
Mining	B	7	9	12	14	14	16	19	16	22	26	27	182	1.76
Food and beverage	C0	26	31	34	37	43	43	43	46	49	53	56	461	4.46
Textile, garment manufacturing and products of leather and fur	C1	24	28	35	37	36	39	45	47	49	54	60	454	4.39
Wood and furniture	C2	1	1	2	1	1	1	2	3	3	3	5	23	0.22
Papermaking and printing	C3	13	13	13	16	16	15	19	19	24	26	30	204	1.97
Petroleum, chemical, plastics, and rubber products	C4	77	88	99	109	107	112	116	112	125	125	131	1,201	11.62
Electronics	C5	15	15	18	21	25	31	30	33	38	51	53	330	3.19
Metal and non-metal	C6	56	62	77	80	93	92	89	89	98	107	113	956	9.25
Machinery, equipment, and instrument manufacturing	C7	92	100	107	122	135	138	154	165	170	188	203	1,574	15.23
Medicine and biological products manufacturing	C8	33	37	44	52	60	64	67	70	74	74	77	652	6.31
Other manufacturing	C9	3	8	11	12	11	10	12	12	15	18	19	131	1.27
Production and supply of electricity, steam and tap water	D	28	29	36	39	41	45	48	50	48	48	51	463	4.48
Construction	E	9	12	13	15	16	21	24	23	31	30	31	225	2.18
Transportation and warehousing	F	18	22	28	31	33	35	37	39	42	41	44	370	3.58
Information technology	G	38	46	50	51	53	53	53	54	64	71	78	611	5.91
Wholesale and retail	H	65	66	71	76	79	76	78	75	77	79	86	828	8.01
Real estate	J	24	25	28	31	33	34	35	34	36	39	39	358	3.46
Social services	K	17	23	30	30	30	32	33	33	36	40	41	345	3.34
Communication and culture	L	6	7	6	7	7	6	6	6	6	6	8	71	0.69
Conglomerates	M	59	61	61	61	65	59	56	58	56	59	60	655	6.34
Total by year		623	697	796	864	920	943	990	1,008	1,088	1,166	1,242	10,337	100
%		6.03	6.74	7.70	8.36	8.90	9.12	9.58	9.75	10.53	11.28	12.02

Table 3. Descriptive statistics.

Variable	N	Mean	Std. Dev.	Min	Q1	Median	Q3	Max
DA	10,337	0.01	0.10	−0.31	−0.04	0.00	0.05	0.39
WMR	10,337	0.14	0.10	0.00	0.06	0.12	0.20	0.67
REGLIST	10,337	0.98	0.25	0.33	0.78	0.99	1.20	1.32
BIG4	10,337	0.04	0.19	0.00	0.00	0.00	0.00	1.00
TENURE	10,337	6.82	4.09	1.00	4.00	6.00	9.00	20.00
ANALYST	10,337	0.98	1.13	0.00	0.00	0.69	1.79	3.66
INSTSHR	10,337	0.14	0.15	0.00	0.02	0.08	0.22	0.54
MKT	10,337	7.94	2.22	0.33	6.27	7.66	9.55	11.71
LNBGS	10,337	1.72	0.65	0.00	1.39	1.79	2.19	2.99
CHGSALES	10,337	0.12	0.26	−0.47	0.00	0.07	0.19	1.54
BTM	10,337	0.55	0.26	0.06	0.34	0.54	0.76	1.18
ISSUE	10,337	0.85	0.35	0.00	1.00	1.00	1.00	1.00
MZ	10,337	0.83	0.81	0.00	0.00	1.00	2.00	2.00
LAGACCR	10,337	−0.02	0.10	−0.30	−0.07	−0.02	0.02	0.36
FIRST	10,337	0.38	0.16	0.09	0.26	0.36	0.51	0.76
DUAL	10,337	0.13	0.33	0.00	0.00	0.00	0.00	1.00
INDR	10,337	0.33	0.10	0.00	0.33	0.33	0.36	0.71
MANSHR	10,337	0.01	0.06	0.00	0.00	0.00	0.00	0.42
BOARD	10,337	2.22	0.21	1.10	2.20	2.20	2.40	2.94
OCF	10,337	0.04	0.09	−0.23	0.00	0.03	0.09	0.33
ROA	10,337	0.05	0.06	−0.22	0.03	0.05	0.08	0.23
SIZE	10,337	21.52	1.02	19.19	20.81	21.43	22.12	25.16
LEV	10,337	0.50	0.18	0.07	0.37	0.51	0.63	0.91
STATE	10,337	0.69	0.46	0.00	0.00	1.00	1.00	1.00

Note: All the variables are defined in Table 1.

Table 4. Pearson Correlation Matrix.

		(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)	(19)	(20)	(21)	(22)	(23)	(24)
(1)	DA	1.000
(2)	WMR	−0.005	1.000
(3)	REGLIST	0.012	−0.012	1.000
(4)	BIG4	0.003	−0.032^***	0.088^***	1.000
(5)	TENURE	0.003	0.077^***	0.094^***	−0.052^***	1.000
(6)	ANALYST	0.091^***	−0.043^***	0.047^***	0.098^***	0.089^***	1.000
(7)	INSTSHR	0.009	0.051^***	−0.024^**	0.018*	0.015	0.213^***	1.000
(8)	MKT	0.037^***	0.081^***	0.605^***	0.081^***	0.178^***	0.261^***	0.069^***	1.000
(9)	LNBGS	0.052^***	−0.036^***	0.004	−0.022^**	0.082^***	0.170^***	0.004	0.177^***	1.000
(10)	CHGSALES	0.039^***	−0.029^***	0.051^***	0.038^***	−0.005	0.191^***	0.077^***	0.034^***	0.054^***	1.000
(11)	BTM	0.035^***	−0.091^***	0.016^*	0.066^***	−0.045^***	−0.209^***	−0.197^***	−0.109^***	−0.050^***	−0.073^***	1.000
(12)	ISSUE	0.076^***	−0.038^***	0.033^***	−0.048^***	0.021^**	−0.024^**	−0.057^***	−0.005	0.088^***	0.018*	0.066^***	1.000
(13)	MZ	−0.064^***	−0.046^***	−0.058^***	−0.024^**	−0.017*	−0.180^***	−0.107^***	−0.101^***	0.005	−0.154^***	0.346^***	0.240^***	1.000
(14)	LAGACCR	0.118^***	0.014	0.014	−0.009	−0.039^***	0.027^***	−0.013	0.039^***	0.026^***	−0.005	0.009	0.049^***	−0.028^***	1.000
(15)	FIRST	0.019^*	−0.143^***	0.025^**	0.110^***	−0.135^***	0.036^***	−0.109^***	−0.091^***	−0.082^***	0.087^***	0.217^***	−0.040^***	0.000	0.001	1.000
(16)	DUAL	−0.000	0.078^***	0.004	−0.003	0.001	0.012	0.031^***	0.061^***	0.028^***	−0.008	−0.074^***	−0.020^**	−0.046^***	0.034^***	−0.072^***	1.000
(17)	INDR	0.022^**	0.049^***	0.035^***	0.021^**	0.142^***	0.265^***	0.056^***	0.326^***	0.232^***	0.057^***	−0.003	0.003	0.006	−0.015	−0.101^***	0.038^***	1.000
(18)	MANSHR	0.053^***	0.047^***	0.090^***	−0.020^**	−0.111^***	0.156^***	−0.004	0.206^***	0.067^***	0.038^***	−0.113^***	0.016*	−0.106^***	0.074^***	−0.136^***	0.120^***	0.094^***	1.000
(19)	BOARD	−0.004	−0.113^***	−0.027^***	0.053^***	−0.043^***	0.087^***	0.035^***	−0.072^***	−0.012	0.0373^***	0.108^***	0.022^**	0.066^***	−0.056^***	0.029^***	−0.104^***	−0.163^***	−0.079^***	1.000
(20)	OCF	−0.280^***	−0.026^***	−0.022^**	0.020^**	−0.016	0.099^***	0.022^**	0.007	−0.000	0.122^***	−0.022^**	−0.061^***	−0.093^***	−0.062^***	0.079^***	−0.019^*	0.024^**	−0.010	0.032^***	1.000
(21)	ROA	0.253^***	0.001	0.082^***	0.070^***	0.047^***	0.405^***	0.147^***	0.141^***	0.023^**	0.300^***	−0.132^***	−0.089^***	−0.403^***	0.017*	0.099^***	−0.014	0.083^***	0.083^***	0.039^***	0.187^***	1.000
(22)	SIZE	0.103^***	−0.145^***	0.072^***	0.181^***	0.115^***	0.536^***	0.029^***	0.187^***	0.177^***	0.178^***	0.230^***	0.114^***	0.204^***	0.034^***	0.203^***	−0.063^***	0.171^***	−0.053^***	0.188^***	0.043^***	0.206^***	1.000
(23)	LEV	−0.052^***	−0.017^*	−0.014	−0.029^***	0.042^***	0.016	−0.005	0.017^*	0.090^***	0.116^***	−0.030^***	0.343^***	0.684^***	−0.016	−0.045^***	−0.029^***	0.071^***	−0.076^***	0.054^***	−0.079^***	−0.269^***	0.319^***	1.000
(24)	STATE	−0.037^***	−0.186^***	−0.028^***	0.040^***	−0.003	−0.036^***	−0.021^**	−0.151^***	−0.057^***	0.012	0.155^***	−0.021^**	0.063^***	−0.081^***	0.273^***	−0.116^***	−0.134^***	−0.286^***	0.188^***	0.022^**	−0.052^***	0.155^***	0.024^**	1.000

Notes: ***: Significant at the 1% level; **: significant at the 5% level; *: significant at the 10% level. All the variables are defined in Table 1.

Table 5. Regression results of discretionary accruals on WMR and other determinants.

Variable	The dependent variable: DA
	Coefficient	t-value
WMR	0.056***	2.85
WMR^2	−0.165***	−2.94
BIG4	−0.010*	−1.82
TENURE	−0.000	−1.11
ANALYST	−0.003**	−2.21
INSTSHR	−0.005	−0.67
MKT	−0.001**	−2.29
LNBGS	0.005***	2.90
CHGSALES	−0.009	−1.40
BTM	0.026***	3.06
ISSUE	0.022***	4.49
MZ	0.004	1.60
LAGACCR	0.085***	4.74
FIRST	0.006	0.57
DUAL	0.000	0.02
INDR	−0.002	−0.12
MANSHR	0.025	1.48
BOARD	−0.003	−0.77
OCF	−0.181**	−2.03
ROA	0.540***	11.69
SIZE	0.006**	2.17
LEV	−0.028**	−2.05
STATE	−0.003	−1.41
INTERCEPT	−0.134*	−1.93
INDUSTRY	Control
YEAR	Control
adj_ R^2	20.47%
Observations	10,337
F- (p-value)	51.18***

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

Table 6. Regression results of discretionary accruals on WMR, monitoring intensity, and other determinants.

Variable	The dependent variable: DA
	Coefficient	t-value
WMR	0.044**	2.07
WMR^2	−0.134**	−2.13
REGLIST	−0.012***	−2.71
WMR × REGLIST	−0.247***	−3.00
WMR^2 × REGLIST	0.588***	3.85
BIG4	−0.010*	−1.75
TENURE	−0.001	−1.12
ANALYST	−0.003**	−2.17
INSTSHR	−0.006	−0.77
MKT	−0.000	−0.29
LNBGS	0.004***	2.84
CHGSALES	−0.009	−1.30
BTM	0.027***	3.20
ISSUE	0.022***	4.65
MZ	0.004	1.62
LAGACCR	0.084***	4.69
FIRST	0.006	0.60
DUAL	−0.000	−0.10
INDR	−0.003	−0.22
MANSHR	0.026	1.54
BOARD	−0.003	−0.81
OCF	−0.181**	−2.03
ROA	0.541***	11.72
SIZE	0.006**	2.16
LEV	−0.029**	−2.08
STATE	−0.003	−1.21
INTERCEPT	−0.130*	−1.87
INDUSTRY	Control
YEAR	Control
adj_ R^2	20.54%
Observations	10,337
F- (p-value)	48.71***
Joint F-test:
WMR+ WMR × REGLIST
F- (p-value)	5.39** (0.0203)
WMR^2+ WMR^2 × REGLIST
F- (p-value)	5.93** (0.0149)

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

Table 7. Robustness checks using alternative measures of discretional accruals.

Panel A: Robustness checks of H1 using alternative measures of discretionary accruals
Variable	(1)		(2)		(3)		(4)
	Dependent variable: DA_ΔCF		Dependent variable: DA_RET		Dependent variable: DA_PMADJ		Dependent variable: RM
	Coefficient	t-value	Coefficient	t-value	Coefficient	t-value	Coefficient	t-value
WMR	0.035**	2.44	0.059***	3.27	0.095***	2.65	0.347*	1.75
WMR^2	−0.098***	−2.91	−0.192***	−3.58	−0.258**	−2.51	−0.932*	−1.77
Other control variables	Control		Control		Control		Control
INTERCEPT	−0.010	−0.29	−0.086***	−2.69	−0.166	−1.57	−0.282	−0.58
INDUSTRY/ YEAR	Control		Control		Control		Control
adj_ R^2	39.74%		20.41%		7.53%		27.15%
Observations	10,337		10,337		10,337		10,209
F-(p-value)	129.61***		49.77***		16.88***		72.77***
Panel B: Robustness checks of H2 using alternative measures of discretionary accruals
Variable	(1)		(2)		(3)		(4)
	Dependent variable: DA_ΔCF		Dependent variable: DA_RET		Dependent variable: DA_PMADJ		Dependent variable: RM
	Coefficient	t-value	Coefficient	t-value	Coefficient	t-value	Coefficient	t-value
WMR	0.030**	2.03	0.052***	2.73	0.076**	1.98	0.322*	1.70
WMR^2	−0.088**	−2.48	−0.175***	−3.01	−0.209*	−1.85	−0.837*	−1.68
REGLIST	−0.011***	−3.87	−0.009***	−3.66	−0.011	−1.17	−0.108*	−1.78
WMR × REGLIST	−0.105*	−1.95	−0.187**	−2.20	−0.453***	−2.97	−1.825**	−2.30
WMR^2 × REGLIST	0.208**	2.36	0.387***	3.32	0.991***	4.78	4.741**	2.17
Other control variables	Control		Control		Control		Control
INTERCEPT	−0.007	−0.19	−0.080**	−2.55	−0.165	−1.58	−0.199	−0.44
INDUSTRY/ YEAR	Control		Control		Control		Control
adj_ R^2	39.83%		20.48%		7.57%		27.18%
Observations	10,337		10,337		10,337		10,209
F-(p-value)	123.16***		47.29***		16.11***		69.02***

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

Table 8. Robustness checks using the 2SLS regression to control for potential endogeneity.

Variable		Section A: Eight instrumental variables									Section B: Two instrumental variables
		The first stage			The second stage						The first stage			The second stage
		Dependent variable: WMR			Dependent variable: DA						Dependent variable: WMR			Dependent variable: DA
		(1)			(2) H1			(3) H2			(4)			(5) H1			(6) H2
		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value
LISTAGE		0.002***	3.16
SD		0.000	0.34
NONEXEDR		−0.001	−0.04
NUMIND		0.002	1.40
RET		0.000	0.11
MARRET		0.001	0.16
FEMALE		−0.007	−1.25								−0.007	−1.44
GDP_PC		0.026***	4.02								0.027***	4.25
WMR					0.521*	1.79		1.264**	1.99					0.467**	2.26		0.770**	2.23
WMR^2					−2.425**	−2.45		−2.272**	−2.50					−2.049***	−3.16		−3.005***	−2.74
REGLIST								−0.079**	−2.52								−0.055***	−2.76
WMR × REGLIST								−0.804*	−1.92								−0.493*	−1.91
WMR^2 × REGLIST								3.042**	2.14								2.133**	2.30
Other control variable		Control			Control			Control			Control			Control			Control
INTERCEPT		0.408***	3.59		−0.103	−1.14		−0.149	−1.29		0.406***	3.65		−0.118	−1.38		−0.108	−1.19
INDUSTRY/YEAR		Control			Control			Control			Control			Control			Control
adj_ R^2		16.79%			19.75%			19.87%			16.27%			20.58%			20.73%
Observations		10,156			10,156			10,156			10,156			10,156			10,156
F-(p-value)		42.83***			48.15***			45.98***			46.66***			51.53***			49.25***

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for a two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

Table 9. Additional tests considering different female members.

Variable		Section A: Female members of the board/supervisory board						Section B: Female senior managers
		(1)			(2)			(3)			(4)
		H1			H2			H1			H2
		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value		Coefficient	t-value
WMR		0.069**	2.39		0.064**	2.16		0.011**	2.11		0.011**	2.10
WMR^2		−0.374***	−2.81		−0.352***	−2.58		−0.022**	−2.50		−0.022***	−2.59
REGLIST					−0.015***	−3.05					−0.010*	−1.95
WMR × REGLIST					−0.274***	−2.59					0.004	0.13
WMR^2 × REGLIST					1.038**	2.35					−0.033	−1.03
BIG4		−0.010*	−1.83		−0.009*	−1.67		−0.010*	−1.82		−0.010*	−1.76
TENURE		−0.001	−1.07		−0.001	−1.09		−0.0001	−1.08		−0.001	−1.07
ANALYST		−0.003**	−2.26		−0.003**	−2.23		−0.003**	−2.32		−0.003**	−2.26
INSTSHR		−0.005	−0.60		−0.005	−0.67		−0.005	−0.59		−0.005	−0.65
MKT		−0.001**	−2.17		−0.000	−0.26		−0.001**	−2.18		−0.000	−0.20
LNBGS		0.005***	2.82		0.004***	2.70		0.005***	2.99		0.005***	2.89
CHGSALES		−0.009	−1.38		−0.009	−1.29		−0.009	−1.38		−0.009	−1.29
BTM		0.026***	3.06		0.027***	3.24		0.025***	2.99		0.026***	3.13
ISSUE		0.022***	4.50		0.022***	4.62		0.022***	4.48		0.022***	4.60
MZ		0.003	1.55		0.003	1.51		0.004	1.61		0.004*	1.66
LAGACCR		0.085***	4.77		0.084***	4.76		0.085***	4.73		0.085***	4.72
FIRST		0.006	0.61		0.006	0.66		0.006	0.63		0.006	0.61
DUAL		0.000	0.09		−0.000	−0.01		0.000	0.06		0.000	0.03
INDR		−0.002	−0.13		−0.003	−0.18		−0.002	−0.15		−0.003	−0.19
MANSHR		0.025	1.46		0.026	1.50		0.027	1.58		0.027	1.61
BOARD		−0.004	−0.99		−0.005	−1.12		−0.003	−0.61		−0.003	−0.70
OCF		−0.181**	−2.03		−0.181**	−2.03		−0.181**	−2.03		−0.181**	−2.03
ROA		0.539***	11.73		0.540***	11.73		0.539***	11.65		0.539***	11.60
SIZE		0.006**	2.19		0.006**	2.20		0.006**	2.20		0.006**	2.18
LEV		−0.028**	−2.02		−0.027**	−1.97		−0.029**	−2.14		−0.030**	−2.16
STATE		−0.003	−1.33		−0.003	−1.27		−0.003	−1.44		−0.003	−1.34
INTERCEPT		−0.131*	−1.91		−0.124*	−1.83		−0.136*	−1.92		−0.135*	−1.87
INDUSTRY/ YEAR		Control			Control			Control			Control
adj_ R^2		20.48%			20.55%			20.44%			20.48%
Observations		10,337			10,337			10,337			10,337
F-(p-value)		51.21***			48.73***			51.10***			48.53***

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

Table 10. Additional tests.

Panel A: Additional tests considering business complexity

Variable

Section A: High business complexity

Section B: Low business complexity

(1) H1

(2) H2

(3) H1

(4) H2

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

WMR

0.038

1.21

0.024

0.72

0.083***

3.51

0.073***

2.71

WMR^2

−0.150

−1.42

−0.114

−0.99

−0.211***

−2.80

−0.180**

−2.04

REGLIST

−0.014**

−2.34

−0.013*

−1.79

WMR × REGLIST

−0.181

−1.10

−0.298**

−2.49

WMR^2 × REGLIST

0.529

1.38

0.624***

2.67

Other control variables

Control

Control

Control

Control

INTERCEPT

−0.132

−1.56

−0.122

−1.44

−0.134*

−1.81

−0.134*

−1.77

INDUSTRY/ YEAR

Control

Control

Control

Control

adj_ R^2

17.92%

17.94%

23.68%

23.77%

Observations

5,510

5,510

4,827

4,827

F-(p-value)

23.69***

22.50***

29.26***

27.88***

Panel B: Additional tests considering information transparency

Variable

Section A: High information transparency

Section B: Low information transparency

(1) H1

(2) H2

(3) H1

(4) H2

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

WMR

−0.055

−0.41

−0.083

−0.63

0.187**

2.32

0.132*

1.79

WMR^2

0.474

1.14

0.554

1.54

−0.436**

−2.02

−0.320*

−1.65

REGLIST

−0.022

−0.72

−0.047***

−3.38

WMR × REGLIST

−1.044

−1.26

−0.760***

−3.74

WMR^2 × REGLIST

3.635

1.52

1.124**

2.16

Other control variables

Control

Control

Control

Control

INTERCEPT

−0.296*

−1.90

−0.266*

−1.68

−0.222*

−1.72

−0.194

−1.64

INDUSTRY/ YEAR

Control

Control

Control

Control

adj_ R^2

46.85%

46.99%

18.31%

18.88%

Observations

399

399

3,015

3,015

F-(p-value)

8.31***

7.92***

14.51***

14.23***

Panel C: Additional tests considering the nature of ultimate owners

Variable

Section A: SOEs

Section B: Non-SOEs

(1) H1

(2) H2

(3) H1

(4) H2

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

Coefficient

t-value

WMR

0.086**

2.52

0.077**

2.26

−0.043

−0.96

−0.031

−0.65

WMR^2

−0.246***

−2.74

−0.213**

−2.35

0.083

0.86

0.060

0.63

REGLIST

−0.031***

−3.62

−0.015

−1.04

WMR × REGLIST

−0.226*

−1.91

−0.146

−1.00

WMR^2 × REGLIST

0.448*

1.95

0.414

1.34

Other control variables

Control

Control

Control

Control

INTERCEPT

−0.098*

−1.74

−0.080

−1.52

−0.268*

−1.93

−0.246*

−1.68

INDUSTRY/ YEAR

Control

Control

Control

Control

adj_ R^2

25.14%

25.31%

17.30%

17.27%

Observations

6,971

6,971

3,366

3,366

F-(p-value)

46.89***

44.73

14.53***

13.77***

Notes: ***,** and * represent the 1%, 5% and 10% levels of significance, respectively, for two-tailed tests. All reported t-statistics are based on standard errors adjusted for clustering at the firm level and the year level (Petersen, 2009). All the variables are defined in Table 1.

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