The size of the firm can also be measured in a
number of ways such as total assets, number of
employees, sales and market capitalisation. In
this study, the natural log of revenue is used
consistent with prior accounting research
(Roberts, 1992; Hoque and James, 2000;
Elijido-Ten, 2009). Log transformation is
considered essential because variables with
observations that are large in absolute amounts
can overwhelm other variables in the
regression iteration process.
In terms of industry, the notion advanced in
previous studies is that industry classification
captures certain systematic relation between
consumer visibility and other associated risks
such as social/environmental responsibility
risk that could lead to regulatory intervention.
In this study, industry (IND) is a dichotomous
variable: a score of 1 is awarded to firms
belonging to environmentally sensitive
industry (ESI); 0 otherwise. As in previous
research, the environmentally sensitive
industries are those in the energy, utilities,
transportation, materials and
telecommunication industries