Global Industry Classification Standard – Definition

Cite this article as:"Global Industry Classification Standard – Definition," in The Business Professor, updated May 22, 2019, last accessed December 4, 2020,


Global Industry Classification Standard (GICS) Explained

The Global Industry Classification Standard (GICS) is a standardized classification scheme in the financial and investment industry. GICS is a multi-tiered system that was created in 1991 by Morgan Stanley Capital International (MSCI) and Standard & Poor’s (S&P) Dow Jones Indices.

GICS is used for global financing purpose, it provides standardized industry definitions for classified stocks. It is a classification system for equities or stocks (both domestic and international) in order to make investment a little more efficient. GICS consists of several sectors and many of these sectors have been changed or added to over the years.

A Little More on What is the Global Industry Classification Standard

The Global Industry Classification Ā Standard (GICS) is a multi-tiered standardized classification system. It has four levels which are; 11 sectors which are split into 24 industry groups, 69 industries, and 158 sub-industries.

GICS was developed in 1999 to provide an industrial taxonomy across different sectors that would make investment more efficient. The first level of the classification which consists of eleven sectors include; Energy, information technology, Communication Services, materials, Healthcare, Consumer Discretionary, Consumer Staples, Utilities, Real Estate, Financials and industrials. The three other levels are subsets of these 11 sectors.

Morgan Stanley Capital International (MSCI) and Standard & Poor’s (S&P) Dow Jones Indices developed GICS in 1999 for the purpose of classifying stocks using the standardized industry definitions. GICS capture the vast industry sectors in order to guide investors and other shareholders involved in investment processes.

Since its establishment, GICS has been widely used in the classification of stocks which has been helpful to brokers,asset managers and investors. GICS shows the current states of industries that participate in the global market, it accounts for over 95% of listed companies and over 26,000 stocks. However, due to recent changes and expansion of different industries, annual reviews are carried out to ensure that the classifications of GICS are accurate.

Reference for GICS

Academic Research on Global Industry Classification Standards

What’s my line? A comparison of industry classification schemes for capital market research, Ā Bhojraj, S., Lee, C. M., & Oler, D. K. (2003). Journal of Accounting Research, 41(5), 745-774.

Incorporating global industrial classification standard into portfolio allocation: A simple factor-based large covariance matrix estimator with high-frequency data, Fan, J., Furger, A., & Xiu, D. (2016). Journal of Business & Economic Statistics, 34(4), 489-503.

The importance of industry classification in estimating concentration ratios, Hrazdil, K., & Zhang, R. (2012). Economics Letters, 114(2), 224-227.

A systems-based approach to industry classification, Dalziel, M. (2007). Research Policy, 36(10), 1559-1574.

Quality standards, conventions and the governance of global value chains, Ponte, S., & Gibbon, P. (2005). Economy and society, 34(1), 1-31.

A systems-based approach to industry classification, Dalziel, M. (2007). Research Policy, 36(10), 1559-1574.

The toxic intensity of industrial production: global patterns, trends, and trade policy, Hettige, H., Lucas, R. E., & Wheeler, D. (1992). The American Economic Review, 478-481.

A comparison of industry classification schemes: A large sample study, Hrazdil, K., Trottier, K., & Zhang, R. (2013). Economics Letters, 118(1), 77-80.

The impact of industry classification schemes on financial research, Weiner, C. (2005).

Structural change and industrial classification, Hicks, D. (2011).Structural Change and Economic Dynamics, 22(2), 93-105.

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