*3.1. Financial Constraint*

Adopting the Financial Constraint Index (*FCindex*), formulated by Kaplan and Zingales (1997)2, this study divided the samples into two groups: high financial constraints *HFC* and low financial constraints *LFC*. *HFC* was set to1 if the *FCindex* of a sample company was higher than the mean value of the industry; otherwise, it was 0. The *FCindex* estimated by Kaplan and Zingales (1997) is denoted as

$$\begin{array}{l} F \text{Cindex} = -1.002 \times (\frac{\text{Cashflow}}{K}) + 0.283 \times Q + 3.139 \times (\frac{D \text{cdt}}{K}) \\ -39.368 \times (\frac{\text{Dividends}}{K}) - 1.315 \times (\frac{\text{Cash}}{K}) \end{array} \tag{2}$$

where *K* refers to the total assets; *Cashflow* represents the net profit after the tax subtracted by the abnormal item and depreciation; *Q* is the proxy variable of Tobin'Q, that is, the sum of the market value of equity and the book value of debt divided by the book value of the asset; *Debt* is the total debt; *Dividends* refers to the total cash dividends paid by the enterprise; *Cash* is the cash and cash equivalents; and the figures in brackets below the coefficients in Equation (2) are the standard deviations.
