Finally, we include several dummy variables: (i) SMI, a dummy variable that is
equal to one if a firm is included in the Swiss Market Index, or zero otherwise, and (ii)
Industry, which relates to dummy variables in 12 industries according to the classification
of Swiss Exchange (SWX). Assuming that all relations are linear and labelling the
other five corporate governance mechanisms as CGMij and Tobin’s Q simply as Qi,
the first equation of our system is: