IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v118y2013i1p77-80.html
   My bibliography  Save this article

A comparison of industry classification schemes: A large sample study

Author

Listed:
  • Hrazdil, Karel
  • Trottier, Kim
  • Zhang, Ray

Abstract

In a large sample setting, we compare four broadly available industry classification schemes in their effectiveness to group stocks with similar operating characteristics. We demonstrate the advantage of the Global Industry Classification Scheme to be consistent across different application schemes common to capital market research and across different groups of firms.

Suggested Citation

  • Hrazdil, Karel & Trottier, Kim & Zhang, Ray, 2013. "A comparison of industry classification schemes: A large sample study," Economics Letters, Elsevier, vol. 118(1), pages 77-80.
  • Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:77-80
    DOI: 10.1016/j.econlet.2012.09.022
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512005290
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.econlet.2012.09.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kahle, Kathleen M. & Walkling, Ralph A., 1996. "The Impact of Industry Classifications on Financial Research," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(3), pages 309-335, September.
    2. Kathleen M. Kahle & Ralph A. Walkling, "undated". "The Impact of Industry Classifications on Financial Research," Research in Financial Economics 9607, Ohio State University.
    3. Boni, Leslie & Womack, Kent L., 2006. "Analysts, Industries, and Price Momentum," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 41(1), pages 85-109, March.
    4. Hrazdil, Karel & Zhang, Ray, 2012. "The importance of industry classification in estimating concentration ratios," Economics Letters, Elsevier, vol. 114(2), pages 224-227.
    5. Sanjeev Bhojraj & Charles M. C. Lee & Derek K. Oler, 2003. "What's My Line? A Comparison of Industry Classification Schemes for Capital Market Research," Journal of Accounting Research, Wiley Blackwell, vol. 41(5), pages 745-774, December.
    6. Fama, Eugene F. & French, Kenneth R., 1997. "Industry costs of equity," Journal of Financial Economics, Elsevier, vol. 43(2), pages 153-193, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zura Kakushadze & Willie Yu, 2017. "Open Source Fundamental Industry Classification," Data, MDPI, vol. 2(2), pages 1-77, June.
    2. Chung, Dennis Y. & Hrazdil, Karel & Trottier, Kim, 2015. "On the efficiency of intra-industry information transfers: The dilution of the overreaction anomaly," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 153-167.
    3. Tingting Zhang & Shunbo Yao & Jinna Yu & Assem Abu Hatab & Zhen Liu, 2020. "Effects of China’s Collective Forestland Tenure Reform Policies on Forest Product Firm Values," Land, MDPI, vol. 9(4), pages 1-20, April.
    4. Li, Scott & Liu, Qianqiu & Refalo, James, 2020. "Industry classification, product market competition, and firm characteristics," Finance Research Letters, Elsevier, vol. 36(C).
    5. Lysle Boller & Fiona Scott Morton, 2020. "Testing the Theory of Common Stock Ownership," NBER Working Papers 27515, National Bureau of Economic Research, Inc.
    6. Korn, Olaf & Möller, Philipp M. & Schwehm, Christian, 2019. "Drawdown measures: Are they all the same?," CFR Working Papers 19-04, University of Cologne, Centre for Financial Research (CFR).
    7. Bagnara, Matteo & Goodarzi, Milad, 2023. "Clustering-based sector investing," SAFE Working Paper Series 397, Leibniz Institute for Financial Research SAFE.
    8. Zura Kakushadze & Willie Yu, 2017. "Open Source Fundamental Industry Classification," Papers 1706.04210, arXiv.org, revised Dec 2017.
    9. Li, Scott, 2022. "Industry classification, industry momentum and short-term reversal," Finance Research Letters, Elsevier, vol. 48(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karel Hrazdil & Thomas Scott, 2013. "The role of industry classification in estimating discretionary accruals," Review of Quantitative Finance and Accounting, Springer, vol. 40(1), pages 15-39, January.
    2. Zura Kakushadze & Willie Yu, 2017. "Open Source Fundamental Industry Classification," Papers 1706.04210, arXiv.org, revised Dec 2017.
    3. Zura Kakushadze & Willie Yu, 2017. "Open Source Fundamental Industry Classification," Data, MDPI, vol. 2(2), pages 1-77, June.
    4. Lee, Charles M.C. & Ma, Paul & Wang, Charles C.Y., 2015. "Search-based peer firms: Aggregating investor perceptions through internet co-searches," Journal of Financial Economics, Elsevier, vol. 116(2), pages 410-431.
    5. Brickley, James A. & Zimmerman, Jerold L., 2010. "Corporate governance myths: Comments on Armstrong, Guay, and Weber," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 235-245, December.
    6. repec:hum:wpaper:sfb649dp2005-062 is not listed on IDEAS
    7. Weiner, Christian, 2005. "The impact of industry classification schemes on financial research," SFB 649 Discussion Papers 2005-062, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    8. Chou, Pin-Huang & Ho, Po-Hsin & Ko, Kuan-Cheng, 2012. "Do industries matter in explaining stock returns and asset-pricing anomalies?," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 355-370.
    9. Lisa Baudot & Zhongwei Huang & Dana Wallace, 2021. "Stakeholder Perceptions of Risk in Mandatory Corporate Responsibility Disclosure," Journal of Business Ethics, Springer, vol. 172(1), pages 151-174, August.
    10. Katarzyna Platt, 2020. "Corporate Bonds And Product Market Competition," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(3), pages 615-647, August.
    11. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, C.E.P.R. Discussion Papers.
    12. Gerard Hoberg & Gordon Phillips, 2016. "Text-Based Network Industries and Endogenous Product Differentiation," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1423-1465.
    13. Chen, Huaizhi & Cohen, Lauren & Lou, Dong, 2013. "Industry window dressing," LSE Research Online Documents on Economics 119035, London School of Economics and Political Science, LSE Library.
    14. Duong T. Pham, 2020. "CEO influence on the board of directors: Evidence from corporate spinoffs," European Financial Management, European Financial Management Association, vol. 26(5), pages 1324-1349, November.
    15. Chen, Sheng-Syan & Chen, Po-Jung & Lin, Wen-Chun, 2012. "The impact of strategic interaction on earnings expectations associated with corporate product strategies," Journal of Banking & Finance, Elsevier, vol. 36(1), pages 66-77.
    16. Dou, Winston Wei & Ji, Yan & Wu, Wei, 2021. "Competition, profitability, and discount rates," Journal of Financial Economics, Elsevier, vol. 140(2), pages 582-620.
    17. Clarke, Jonathan & Khorana, Ajay & Patel, Ajay & Rau, P. Raghavendra, 2007. "The impact of all-star analyst job changes on their coverage choices and investment banking deal flow," Journal of Financial Economics, Elsevier, vol. 84(3), pages 713-737, June.
    18. Bagnara, Matteo & Goodarzi, Milad, 2023. "Clustering-based sector investing," SAFE Working Paper Series 397, Leibniz Institute for Financial Research SAFE.
    19. van der Heijden, Hans, 2022. "Predicting industry sectors from financial statements: An illustration of machine learning in accounting research," The British Accounting Review, Elsevier, vol. 54(5).
    20. Amy P. Hutton & Lian Fen Lee & Susan Z. Shu, 2012. "Do Managers Always Know Better? The Relative Accuracy of Management and Analyst Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 50(5), pages 1217-1244, December.
    21. Sanjeev Bhojraj & Charles M. C. Lee & Derek K. Oler, 2003. "What's My Line? A Comparison of Industry Classification Schemes for Capital Market Research," Journal of Accounting Research, Wiley Blackwell, vol. 41(5), pages 745-774, December.

    More about this item

    Keywords

    Industry classification; Homogeneity; Performance; GICS;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • G1 - Financial Economics - - General Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:77-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.