Director Networks and Cost of Equity Capital: Based on “Busy Director Hypothesis” Analysis
Table 1
Variable definitions.
Symbol
Variable name
Variable definition
RE
The cost of capital
PEG model
Degree
Degree center
The number of direct connections between target directors and other directors in the director networks
Betweenness
Betweenness centrality
The degree to which an individual lies between any two other individuals in a network
Top1
Degree of equity concentration
The shareholding ratio of the largest shareholder
State
Property rights
Nature of ultimate controller: 1 in case of state-owned holding, 0 otherwise
It
Inventory turnover
Main business cost/average inventory balance
Roe
Return on net assets
Net income/average balance of owners’ equity
Grow
Growth rate of revenue
(Operating income for the current period-operating income for the same period of the previous year)/operating income for the same period of the previous year
Tat
Total asset turnover
Operating revenue/average total assets
Lev
Financial leverage
Long-term borrowings/total assets
Lnpe
Stock price/earnings ratio
The natural logarithm of the average annual price/earnings ratio of individual stocks
R&D
R&D investment intensity
Ratio of R&D investment to revenue
Dual
Dual
1 when the chairman is concurrently the general manager, 0 otherwise
