Table A1.

Variables definitions.

Variables	Definitions
Dependent variables
Investments	Change in fixed assets plus depreciation scaled by total assets.
M&A	Total expenditures in mergers and acquisitions divided by total assets.
Short-debt leverage	Short-term debt divided by total assets.
Long-term leverage	Long-term debt divided by total assets.
ROA	Earnings before interest and taxes divided by total assets.
ROE	Earnings before interest and taxed divided by total shareholders' equity.
Cash	Cash and cash equivalents divided by net assets. Net assets are calculated as total assets minus cash and cash equivalents.
Dividend	Cash dividends divided by total assets.
Independent variables
Managerial ability	It is residual efficiency resulting from a Tobit regression following Demerjian et al. (2012) that regresses firm efficiency score on a set of industry and firm-specific variables.
Control variables
Institutional	Proportion of shares held by institutional investors.
Board	Total number of directors on board.
Duality	A variable, set to 1 if the CEO and Chairman of the board are the same and 0 otherwise.
Independence	Number of independent directors on board.
State	A dummy variable set to 1 if the firm is state-controlled, otherwise 0.
Size	The natural logarithm of total assets.
Growth	Change in the sales. Change in the operating revenue. Current year sales minus previous year sales divided by previous year sales.
Cash flow	Operating cash flows divided by total assets.
Profitability	Earnings before interest and taxed divided by total assets.
Leverage	Total debt divided by total assets.
MTB	Market value of equity divided by book value of equity.

Notes. All dependent variables are computed using quarterly data for the year 2020. The independent and control variables are computed using annual data for the year 2019.