This factor is the value of the natural logarithm of the company's market capitalization. Market capitalization is an important indicator of company size. It is the product of the stock closing price and the outstanding shares. Logarithmic transformation can reduce the skewness of data distribution, making it closer to normal distribution, and thus more robust in statistical analysis. Empirical studies have shown that smaller market capitalization is usually associated with higher stock returns, a phenomenon known as the "small market capitalization effect." This factor reflects the market's risk preference and expected returns for companies of different sizes.