ROE as a performance measure in performance-vested stock option contracts in China

Frontiers of Business Research in China

Table 7 Using financial development to measure the accessibility of bank loans

Panel A: Average scores of the level of financial development
Province	Average score	N
Guangzhou	0.59	73
Zhejiang	0.68	40
Beijing	0.65	38
Jiangsu	0.58	16
Anhui	0.47	14
Shandong	0.53	14
Shanghai	0.73	12
Fujian	0.58	11
Hubei	0.40	10
Liaoning	0.48	10
Jiangxi	0.41	9
Henan	0.39	8
Hunan	0.42	8
Sichuan	0.45	8
Yunnan	0.40	6
Jilin	0.38	5
Guizhou	0.31	4
Hainan	0.36	4
Hebei	0.41	4
Neimenggu	0.38	4
Tianjin	0.58	4
Chongqing	0.58	4
Heilongjiang	0.35	3
Gansu	0.30	2
Shanxi	0.36	2
Xinjiang	0.24	1
Total		314
Panel B: Firms operating in areas with high levels of financial development
	Coeff.	p value
Intercept	4.37	<0.01
DILUTION	−3.81	<0.01
ROE	−3.88	<0.01
ROEDILUTION*	3.39	<0.01
DEVIATION	1.44	0.14
MB	−0.06	0.52
RET	0.00	0.99
ROA	−0.05	0.99
ISSUESIZE	5.62	0.03
POTSHR	1.41	0.10
FCF	11.66	<0.01
SOE	0.02	0.97
Year Effect	YES
Industry Effect	YES
Pseudo R²	0.430
N	183
Panel C: Firms operating in areas with low levels of financial development
	Coeff.	p value
Intercept	−0.87	0.52
DILUTION	1.39	0.15
ROE	0.56	0.57
ROEDILUTION*	−1.72	0.17
DEVIATION	3.25	0.04
MB	0.34	0.01
RET	−0.62	0.05
ROA	−6.65	0.28
ISSUESIZE	9.34	0.01
POTSHR	2.97	0.10
FCF	10.88	<0.01
SOE	−1.15	0.01
Year Effect	YES
Industry Effect	YES
Pseudo R²	0.553
N	131

Panel A of Table 7 shows the average scores of the level of financial development. The scores are collected from the Financial Development Evaluation Report of Chinese Provinces published by the Chinese Academy of Social Sciences. We separate our sample into two groups based on the sample median of the scores (0.56). Panel B (C) presents the results of firms operating in areas with high (low) levels of financial development. All variables are defined in Table 2