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Showing posts from September, 2020

Alternative Sector Classification Methods

Abstract This paper offers two alternative sector classification methods in order to classify companies more accurately. Introduction During the early 1900s, various departments of the US government initiated research and studies on the various industries and their different functions. Due to the lack of set standards, each department ended up using its own methodology. Consolidating information across multiple sources became a challenge. The Standard Industrial Classification (SIC)  was hence proposed as a uniform classification system, aimed to represent major industries, sub-class and specific function/product, and was formally adopted in 1937.  However, SIC was facing a challenge because of the change in the economic environment. After that, the Global Industry Classification System (GICS) was launched by Standard & Poor's (S&P) and Morgan Stanley (MSCI) in August 1999. The standard provides a comprehensive, globally consistent definition of economic sectors and industr