An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Timothy Cairney
Georgia Southern University

Leslie B. Fletcher
Georgia Southern University

Abstract: We compare the homogeneity of Standard Industry Classification System (SICS) and North American Industry Classification System (NAICS) industries. Member firm homogeneity is measured as the correlation of operating expense changes (and revenue changes) and the variability of inventory, debt, and depreciation policies. Our results suggest that (1) NAICS CLEANED industries, whose reduced members are formed from a single prior SICS industry, are more homogenous than the original SICS industries; (2) NAICS INTACT industries, all of whose members have the same SICS and NAICS codes, are more homogenous than SICS non-INTACT industries; (3) NAICS CONSOLIDATED industries, whose memberships are formed from many prior SICS industries, are not as homogenous as the prior SICS classifications. This may help identify which industries may benefit from additional analysis for benchmarking.

Back to Session Listing

AAA Home Page