Following Matolcsy (2000), Larcker

Following Matolcsy (2000), Larcker et al. (2007), and others, this
study performs the majority of empirical tests with accounting performance
and selects return on equity (RoE) as the proxy variable for
firm performance. We redo the tests with market performance to check
the robustness of the results in Section 5. Next, this work defines the
CEO stock-based compensation as the total value of restricted stock
and that of stock options (using Black-Scholes) in an executive compensation
package. An important point to note is that, in econometric
work, researchers usually use ratio variables to solve the problem of
heteroskedasticity. Accordingly, this investigation further redefines the
CEO equity-based compensation as a percentage of the total annual
compensation of the CEO (i.e., stock-based/total compensation). In
addition, this study includes the debt ratio (total liabilities/total assets)
and the natural logarithm of total assets (i.e., Ln (total assets)) in the
models to control leverage and size effects.