The importance of industry classification in estimating concentration ratios

We compare different industry concentration ratios based on the Standard Industry Classification (SIC) system to ratios based on the Global Industry Classification Standard (GICS) system and demonstrate through the analysis of industry markups that GICS-based measures are better proxies for the actual industry concentration than SIC-based measures.

► The Global Industry Classification Standard (GICS) properly estimates industry concentration. ► The GICS categorizes firms differently than Standard Industry Classification (SIC) system. ► SIC-based concentration estimates are negatively associated with industry markups. ► GICS-based concentration estimates are positively associated with industry markups. ► GICS-based measures are better proxies for actual industry concentration than SIC-based ratios.