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- LOGTA Natural logarithm of firm’s total assets (Compustat data #6) LOSS A dichotomous variable with value of one if client has a negative net income before extraordinary items in year t or t-1; and zero otherwise MANUF A dichotomous variable with value of one if the client firm operates in a manufacturing industry (SIC codes 20-39) PROFIT Net income before extraordinary items and cumulative effect of accounting changes (data #18) deflated by total assets (data #6) UTILITY A dichotomous variable with value of one if the client firm operates in a utility industry (SIC codes 40-49) YEAR Dummy variables for years 2004 to 29
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- TABLE 1 VARIABLE DEFINITIONS Variable Definition Main Variables LAUDITFEE Natural logarithm of audit fee from Audit Analytics, adjusted for inflation relative to 2006 dollar value. CH_AUDIT LAUDITFEE of year t minus LAUDITFEE of year t-1. SP A dichotomous variable with value of one for SP firms when they are in the index. BEF A dichotomous variable with value of one for SP firms before they enter the index. AFT A dichotomous variable with value of one for SP firms after they exit from the index. OLD Number of years a SP firms have been in the index. EXPERT A dichotomous variable with value of one if the auditor has 20% or more market share (based on clients log of total assets) in the two-digit SIC code industry INPLUS A dichotomous variable with value of one for SP firms for the year following the year of addition to the index. DEPLUS A dichotomous variable with value of one for SP firms for the year following the year of deletion to the index.
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