Table 2 Summary of variables and measurement
| Â | Label | Measure | Source |
|---|---|---|---|
Dependent variable | |||
Real earnings management | |||
REM1 | RM_CFO | Abnormal levels of cash flow from operations | Data stream and financial statements |
REM2 | RM_DISX | Abnormal levels of the sum of selling and marketing expenses and general and administrative expenses of the firm (i) in the year (t) | Data stream and financial statements |
REM3 | RM_PROD | Abnormal levels of the sum of the cost of goods sold and change in the inventory of the firm (i) in the year (t) | Data stream and financial statements |
REM4 | RM1 | ABCFO is multiplied by − 1 and then ABPROD are added to it | Data stream and financial statements |
REM5 | RM2 | ABDISX is added to ABCFO after multiplying ABCFO by − 1 | Data stream and financial statements |
REM6 | RM3 | ABCFO is multiplied by − 1 and then ABPROD is added to it, and then ABDISX is added to them after multiplying it by − 1 | Data stream and financial statements |
Independent variables | |||
Board of directors attributes | |||
Board size | BRDSIZE | The number of directors on the board at the end of the financial year | Annual Disclosure Books By EGX, ownership structure reports and BOD reports |
Board independence | BRDIND | It is the number of the independent directors scaled by the total number of directors on the board at the end of its financial year | Annual Disclosure Books By EGX, ownership structure reports and BOD reports |
CEO duality | CEODUL | Binary number that takes 1 if the roles of chairperson and CEO are combined at the end of its financial year, 0 otherwise | Annual Disclosure Books By EGX, ownership structure reports and BOD reports |
Board meetings | BRDMEET | The yearly number meetings held by the board of directors | Annual Disclosure Books By EGX, Ownership Structure reports and BOD reports |
Control variables | |||
Firm size | SIZE | Natural log of the book value of a firm’s total assets at the end of its financial year | Data stream and financial statements |
Liquidity | Liquid | It is the ratio of current assets to current liabilities | Data stream and financial statements |
Performance | ROA | The ratio of net income to total assets at the beginning of the year | Data stream and financial statements |
Performance | ROE | It is net income scaled by the total equity at the beginning of the year | Data stream and financial statements |
Capital structure (Gearings) | GEAR | It is total debt scaled by total equity at the end of the fiscal year | Data stream and financial statements |
Leverage | LEV | It is the book value of total debt scaled by total assets at the end of its financial year | Data stream and financial statements |
Assets Tangibility | AT | It is total of net property, plant and equipment scaled by total assets | Data stream and financial statements |
Operating Cycle | OC | The logarithm of the sum of the inventory and the receivables period | Data stream and financial statements |
Earnings Management Flexibility | EMFLEX | It is a total inventories and receivables scaled by total assets | Data stream and financial statements |