Environmental Engineering Reference
In-Depth Information
detail; however, they are accumulated under two
main categories, environmental and financial
criteria. Companies should make announce-
ments and progress in meeting objectives, have
advanced green technologies, and lead society to
a sustainable future. Financial criteria evaluate the
profitability of the companies and expect strong
management skills and balance sheet.
We compiled our sample from U.S. companies.
There are two main reasons; first, we eliminated
the country effect (Acemoglu, 2009) on vertical
integration, second, we used only the I-O tables
for the U.S. Since all three lists have similar
criteria, we combined these lists and finally get
144 companies. However, information for some
companies is not available in our databases (see
Appendix B for the list of the sustainable firms).
Additionally, the vertical integration level of
companies, which are operating mainly in retail,
transportation, and warehousing industries, cannot
be calculated because I-O tables do not provide
detailed information for these industries. We as-
sume that the companies that are listed in these
sets are successful in pursuing and/or monitoring
sustainability activities. The list of non-sustainable
companies is not available; hence, we assume
that the companies that are not listed in these sets
are not pursuing and/or monitoring sustainability
activities as much successful as listed companies.
In this study, a non-sustainability company
comparison set was generated by looking at the
competitors that are similar to sustainable compa-
nies with regards to financial indicators, products,
and operations. We utilized Hoover and Mergent
Online databases to obtain these “so-called” non-
sustainable companies as these databases report
the competitors for each North American Industry
Classification System (NAICS) code. Bhojraj et
al. (2003) discusses the historical development,
intent, and basic philosophy behind the SIC and
NAICS codes. DJSI United States categorizes
companies under 10 industries. After excluding
Telecommunications industry, which has only one
company, we categorize all sustainable compa-
nies and their competitors within nine industries.
In the next section, we will mention other data
sources in detail.
Data Collection
The Fan & Lang (2000) method utilizes input-
output (I-O) tables to calculate vertical integra-
tion level. The Bureau of Economic Analysis
(BEA), which is an agency of the Department of
Commerce, publishes the benchmark I-O tables
every five years. BEA estimates industry and com-
modity outputs for the I-O make and use tables.
The input-output tables report the dollar value
of each input used to produce the output of more
than 400 different industries in the U.S. economy.
Make-use tables provide a comprehensive picture
of economy and show the relationships between
industries and commodities. Many economists,
analysts, and policymakers use I-O tables in their
analyses. These tables mimic the 6 digit NAICS
codes; however, there are aggregations of some
NAICS codes.
This research will use 2002 I-O tables which
are the latest available data set, because data for
2007 was not publicly available at the time this
chapter was written. Stewart et al. (2007) discusses
the preparation of the 2002 I-O tables. They ex-
plain the utilization and the concepts of make-use
tables and illustrate the methods underlying the
I-O tables in detail.
Standard & Poor's Compustat Industry Seg-
ment database provides financial, statistical, and
marketing information of companies that represent
at least 10 percent of a firm's sales, assets, or prof-
its. Disclosure of data in this database is required
by the Securities and Exchange Commission of the
United States Government. This database is used
extensively by the researchers who apply Fan &
Lang's method. Compustat database compiles the
industry information from firms' annual reports
and 10-K reports that are reported to the Securi-
ties and Exchange Commission. In addition to a
