Automobile styling as a shift variable: an investigation by firm and by industry

This paper reports the results of a test of the ability of the Stock Exchange industrial Classification system (SEIC) to provide homogeneous industry groupings of firms. Aggregation into ‘meta-industries’ is also explored. The analysis shows that while there are significant differences between the 14 SEIC industries considered, several appear to be largely nonhomogeneous with respect to certain of their fundamental economic and structural characteristics. Given this lack of homogeneity it is arguable that the SEIC has fallen shorts of its stated objectives with potential implications for the allocation of resources in UK capital markerts. The greater homogeneity of the four meta-industries derived indicate that use of industry groups at a higher level of aggregation than the SEIC might be more appropriate. A subsidiary objective of the investigation was to examine the potential benefits from adopting a quadratic discriminant methodology as opposed to the more conventional linear rule for studies of a related nature. Our results proved to be consistent with those found in other disciplines which demonstrate that the quadratic approach may have relatively little to offer in practice as opposed to theory.