Supplementary File Table 1. Sector Classification
Original
Fama-French Sector Portfolios(a)
Analysis
Further Analysis
# of
Firms
# of
Observation
Guns(b)
Arms
-
23
317
Aircraft(c)
Arms
-
74
996
Shipbuilding(d)
Arms
-
34
357
Communication
Hybrid(e)
-
752
5784
Chemicals
Hybrid(e)
-
276
3383
Metallic ad Industrial Metal Mining
Hybrid(e)
-
346
1859
Electrical Equipment
Hybrid(e)
-
223
2722
Business Services
Hybrid(e)
-
2193
15027
Construction
Hybrid(e)
-
238
2324
Petroleum and Natural Gas
Hybrid(e)
-
1210
9062
Automobiles and Trucks
Hybrid(e)
-
254
2975
Healthcare
Hybrid(e)
-
2193
2549
Computers
Hybrid(e)
-
758
5786
Electronic Equipment
Hybrid(e)
-
892
8477
Measuring and Control Equipment
Hybrid(e)
-
297
3140
Construction Materials
Hybrid(e)
-
416
5000
Steel Works
Hybrid(e)
-
264
3318
Coal
Hybrid(e)
-
54
384
Medical Equipment
Hybrid(e)
-
492
3944
Pharmaceutical Products
Hybrid(e)
-
842
6727
Precious Metals
Materials(f)
Civilian
Basic
286
1836
Civilian
Industrial(f)
534
6230
Printing and Publishing
Civilian
Industrial(f)
140
1620
Fabricated Products
Civilian
Industrial(f)
73
813
Civilian
Industrial(f)
234
3004
Civilian
Industrial(f)
55
718
Transportation
Civilian
Industrial(f)
513
4796
Agriculture
Civilian
Noncyclical Consumer(f)
70
651
Civilian
Noncyclical
Consumer(f)
325
3714
Noncyclical
Consumer(f)
45
435
Consumer(f)
68
790
20
245
Cyclical
Consumer(f)
178
1631
Cyclical
Consumer(f)
338
2620
Consumer(f)
Machinery
Business Supplies
Shipping Containers
Food Products
Candy Soda
Civilian
Beer, Liquor
Civilian
Noncyclical
Tobacco Products
Civilian
Noncyclical Consumer(f)
Recreation
Entertainment
Civilian
Civilian
Consumer Goods
Civilian
Cyclical
294
3478
Apparel
Civilian
Cyclical Consumer(f)
252
2866
Civilian
Cyclical
Consumer(f)
187
1960
Cyclical
Consumer(f)
133
1698
Consumer(f)
191
1707
725
7078
Rubber and Plastic Products
Textiles
Civilian
Personal Services
Civilian
Cyclical
Wholesale
Civilian
Cyclical Consumer(f)
1
Retail
Civilian
Cyclical Consumer(f)
1004
10268
Restaurants, Hotels, Motels
Civilian
Cyclical Consumer(f)
361
3392
Civilian
Utilities(f)
413
6756
Civilian
Financial(f)
2147
17971
Insurance
Civilian
Financial(f)
474
3715
Real Estate
Civilian
Financial(f)
283
2425
Trading
Civilian
Financial(f)
794
5641
Others
Civilian
386
2795
20497
184984
Utilities
Banking
Total
(a)Fama,
Eugene F, and Kenneth R. French 1997. “Industry Costs of Equity.” Journal of Financial Economics 43(2): 153-193
(b)Firms
with the following standard industry classification numbers (sicnum): sicnum ge 3760 and sicnum le 3769; sicnum ge
3795 and sicnum le 3795; sicnum ge 3480 and sicnum le 3489
(c)Firms
with the following standard industry classification numbers (sicnum): sicnum ge 3720 and sicnum le 3720; sicnum ge
3721 and sicnum le 3721sicnum ge 3723 and sicnum le 3724; sicnum ge 3725 and sicnum le 3725; sicnum ge 3728 and
sicnum le 3729
(d)Firms
with the following standard industry classification numbers (sicnum): sicnum ge 3730 and sicnum le 3731; sicnum ge
3740 and sicnum le 3743
(e)
To identify hybrid sectors, our strategy was to pinpoint those sectors other than Guns, Shipbuilding and Aircraft that receive
defense contracts. We first compiled top 100 defense contractors for each year going back as early as 1998. We then eliminated
all non-US firms. The list had a total of 112 US firms which received a defense contract at least once. Next, we identified the
sector classification of those firms. 58 of those firms are classified according to our definition of Arms. The remaining 54 firms
belong to either one of these following sectors: Automotive and Trucks, from Business Service, Chemicals, Electrical
Equipment, Metallic and Industrial Metal Mining, Petroleum and Natural Gas, Coals, Communication, Computers, Electronic
Equipment, Measuring and Control Equipment, Construction, Construction Materials, Healthcare, Medical Equipment,
Pharmaceutical Products and Healthcare.
(f)
This classification is based on the Thomson Reuters industry classification, which consists of 10 economic sectors: Basic
Material (consisting of companies engaged in the extraction and primary refinement of chemicals, metals, nonmetallic and
construction material; forest, wood and paper products; containers and packaging products); Industrial (consisting of companies
engaged in providing industrial and commercial supplies and services); Energy (consisting of companied engaged in the
exploration, extraction and refining of coal, oil and natural gas); Cyclical Consumer Goods and Services (consisting of
companies engaged in the production of automobiles, homebuilding, household goods, textiles and apparel, as well as hotel
casino, leisure, media and retail operations and services); Non-cyclical Consumer Goods and Services (consisting of companies
engaged in fishing and farming operation, the processing and production of food, beverages and tobacco, manufacturers of
household and personal products, and providers of personal services); Financials (companies engaged in the operation of retail
and commercial banks, insurance companies, real estate operations, investment trusts, and other financial services); Healthcare
(consisting of companies engaged in manufacturing medical equipment, supplies and pharmaceuticals, as well as operating
healthcare facilities and provision of managed health); Technology (consisting of companies engaged in manufacturing
semiconductors, commercial equipment, computer hardware and technology-related office equipment, as well as providers of
consulting and IT service); Telecommunication Services (consisting of companies engaged in fixed-line and wireless
telecommunication networks for voice, data and high-density data); and Utilities (consisting of companies engaged in producing
and delivering electric power, natural gas, water and other utility services, such as steam and cooled air). This classification is
commonly used by economic participants and observers.
2
Supplementary File Table 2. The Breakdown of the Fama-French Industry Classification with Corresponding
Standard Industry Classification (SIC) Codes
Guns
3760-3769 Guided missiles and space vehicles
3795-3795 Tanks and tank components
3480-3489 Ordnance & accessories
Aircraft
3720-3720 Aircraft & parts
3721-3721 Aircraft
3723-3724 Aircraft engines, engine parts
3725-3725 Aircraft parts
3728-3729 Aircraft parts
Shipbuilding
3730-3731 Ship building and repair
Communication
4800-4800 Communications
4810-4813 Telephone communications
4820-4822 Telegraph and other message communication
4830-4839 Radio-TV Broadcasters
4840-4841 Cable and other pay TV services
4880-4889 Communications
4890-4890 Communication services (Comsat)
4891-4891 Cable TV operators
4892-4892 Telephone interconnect
4899-4899 Communication services
Chemicals
2800-2809 Chemicals and allied products
2810-2819 Industrial inorganical chems
2820-2829 Plastic material & synthetic resin
2850-2859 Paints
2860-2869 Industrial organic chems
2870-2879 Agriculture chemicals
2890-2899 Misc chemical products
Non-Metallic and Industrial Metal Mining
1000-1009 Metal mining
1010-1019 Iron ores
1020-1029 Copper ores
1030-1039 Lead and zinc ores
1050-1059 Bauxite and other aluminum ores
1060-1069 Ferroalloy ores
1070-1079 Mining
1080-1089 Mining services
1090-1099 Misc metal ores
1100-1119 Anthracite mining
1400-1499 Mining and quarrying non-metalic minerals
Electrical Equipment
3600-3600 Elec mach eq & supply
3610-3613 Elec transmission
3620-3621 Electrical industrial appar
3623-3629 Electrical industrial appar
3
3640-3644 Electric lighting, wiring
3645-3645 Residential lighting fixtures
3646-3646 Commercial lighting
3648-3649 Lighting equipment
3660-3660 Communication equip
3690-3690 Miscellaneous electrical machinery and equip
3691-3692 Storage batteries
3699-3699 Electrical machinery and equip
Business Services
2750-2759 Commercial printing
3993-3993 Signs, advertising specialty
7218-7218 Services - industrial launderers
7300-7300 Services - business services
7310-7319 Services - advertising
7320-7329 Services - credit reporting agencies, collection services
7330-7339 Services - mailing, reproduction, commercial art
7340-7342 Services - services to dwellings, other buildings
7349-7349 Services - cleaning and builging maint
7350-7351 Services - misc equip rental and leasing
7352-7352 Services - medical equip rental
7353-7353 Services - heavy construction equip rental
7359-7359 Services - equip rental and leasing
7360-7369 Services - personnel supply services
7370-7372 Services - computer programming and data processing
7374-7374 Services - computer processing, data prep
7375-7375 Services - information retrieval services
7376-7376 Services - computer facilities management service
7377-7377 Services - computer rental and leasing
7378-7378 Services - computer maintanence and repair
7379-7379 Services - computer related services
7380-7380 Services - misc business services
7381-7382 Services - security
7383-7383 Services - news syndicates
7384-7384 Services - photofinishing labs
7385-7385 Services - telephone interconnections
7389-7390 Services - misc business services
7391-7391 Services - R&D labs
7392-7392 Services - management consulting & P.R.
7393-7393 Services - detective and protective (ADT)
7394-7394 Services - equipment rental & leasing
7396-7396 Services - trading stamp services
7397-7397 Services - commercial testing labs
7399-7399 Services - business services
7519-7519 Services - trailer rental and leasing
4
8700-8700 Services - engineering, accounting, research, management
8710-8713 Services - engineering, accounting, surveying
8720-8721 Services - accounting, auditing, bookkeeping
8730-8734 Services - research, development, testing labs
8740-8748 Services - management, public relations, consulting
8900-8910 Services - misc
8911-8911 Services - engineering & architect
8920-8999 Services - misc
4220-4229 Warehousing and storage
Construction
1500-1511 Build construction - general contractors
1520-1529 Gen building contractors - residential
1530-1539 Operative builders
1540-1549 Gen building contractors - non-residential
1600-1699 Heavy Construction - not building contractors
1700-1799 Construction - special contractors
Petroleum and Natural Gas
1300-1300 Oil and gas extraction
1310-1319 Crude petroleum & natural gas
1320-1329 Natural gas liquids
1330-1339 Petroleum and natural gas
1370-1379 Petroleum and natural gas
1380-1380 Oil and gas field services
1381-1381 Drilling oil & gas wells
1382-1382 Oil-gas field exploration
1389-1389 Oil and gas field services
2900-2912 Petroleum refining
2990-2999 Misc petroleum products
Automobiles and Trucks
2296-2296 Tire cord and fabric
2396-2396 Auto trim
3010-3011 Tires and inner tubes
3537-3537 Trucks, tractors, trailers
3647-3647 Vehicular lighting
3694-3694 Elec eq, internal combustion engines
3700-3700 Transportation equipment
3710-3710 Motor vehicles and motor vehicle equip
3711-3711 Motor vehicles & car bodies
3713-3713 Truck & bus bodies
3714-3714 Motor vehicle parts
3715-3715 Truck trailers
3716-3716 Motor homes
3792-3792 Travel trailers and campers
3790-3791 Misc trans equip
3799-3799 Misc trans equip
Healthcare
8000-8099 Services - health
5
Computers
3570-3579 Office computers
3680-3680 Computers
3681-3681 Computers - mini
3682-3682 Computers - mainframe
3683-3683 Computers - terminals
3684-3684 Computers - disk & tape drives
3685-3685 Computers - optical scanners
3686-3686 Computers - graphics
3687-3687 Computers - office automation systems
3688-3688 Computers - peripherals
3689-3689 Computers - equipment
3695-3695 Magnetic and optical recording media
7373-7373 Computer integrated systems design
Electronic Equipment
3622-3622 Industrial controls
3661-3661 Telephone and telegraph apparatus
3662-3662 Communications equipment
3663-3663 Radio TV comm equip & apparatus
3664-3664 Search, navigation, guidance systems
3665-3665 Training equipment & simulators
3666-3666 Alarm & signaling products
3669-3669 Communication equipment
3670-3679 Electronic components
3810-3810 Search, detection, navigation, guidance
3812-3812 Search, detection, navigation, guidance
Measuring and Control Equipment
3811-3811 Engr lab and research equipment
3820-3820 Measuring and controlling equipment
3821-3821 Lab apparatus and furniture
3822-3822 Automatic controls - Envir and applic
3823-3823 Industrial measurement instru
3824-3824 Totalizing fluid meters
3825-3825 Elec meas & test instr
3826-3826 Lab analytical instruments
3827-3827 Optical instr and lenses
Construction Materials
0800-0899 Forestry
2400-2439 Lumber and wood products
2450-2459 Wood buildings-mobile homes
2490-2499 Misc wood products
2660-2661 Building paper and board mills
2950-2952 Paving & roofing materials
3200-3200 Stone, clay, glass, concrete etc
3210-3211 Flat glass
3240-3241 Cement hydraulic
3250-3259 Structural clay prods
6
3261-3261 Vitreous china plumbing fixtures
3264-3264 Porcelain electrical supply
3270-3275 Concrete gypsum & plaster
3280-3281 Cut stone and stone products
3290-3293 Abrasive and asbestos products
3295-3299 Non-metalic mineral products
3420-3429 Handtools and hardware
3430-3433 Heating equip & plumbing fix
3440-3441 Fabicated struct metal products
3442-3442 Metal doors, frames
3446-3446 Architectual or ornamental metal work
3448-3448 Pre-fab metal buildings
3449-3449 Misc structural metal work
3450-3451 Screw machine products
3452-3452 Bolts, nuts screws
3490-3499 Misc fabricated metal products
3996-3996 Hard surface floor cover
Steel Works
3300-3300 Primary metal industries
3310-3317 Blast furnaces & steel works
3320-3325 Iron & steel foundries
3330-3339 Prim smelt-refin nonfer metals
3340-3341 Secondary smelt-refin nonfer metals
3350-3357 Rolling & drawing nonferous metals
3360-3369 Non-ferrous foundries and casting
3370-3379 Steel works etc
3390-3399 Misc primary metal products
Coal
Medical Equipment
1200-1299 Bituminous coal
3693-3693 X-ray, electromedical app
3840-3849 Surg & med instru
3850-3851 Ophthalmic goods
Pharmaceutical Products
2830-2830 Drugs
2831-2831 Biological products
2833-2833 Medicinal chemicals
2834-2834 Pharmaceutical preparations
2835-2835 In vitro, in vivo diagnostics
2836-2836 Biological products, except diagnostics
Precious Metals
Machinery
1040-1049 Gold & silver ores
3510-3519 Engines & turbines
3520-3529 Farm and garden machinery
3530-3530 Constr, mining material handling machinery
3531-3531 Construction machinery
3532-3532 Mining machinery, except oil field
3533-3533 Oil field machinery
7
3534-3534 Elevators
3535-3535 Conveyors
3536-3536 Cranes, hoists
3538-3538 Machinery
3540-3549 Metalworking machinery
3550-3559 Special industry machinery
3560-3569 General industrial machinery
3580-3580 Refrig & service ind machines
3581-3581 Automatic vending machines
3582-3582 Commercial laundry and drycleaning machines
3585-3585 Air conditioning, heating, refrid eq
3586-3586 Measuring and dispensing pumps
3589-3589 Service industry machinery
3590-3599 Misc industrial and commercial equipment and mach
Printing and Publishing
2700-2709 Printing publishing and allied
2710-2719 Newspapers: publishing-printing
2720-2729 Periodicals: publishing-printing
2730-2739 Books: publishing-printing
2740-2749 Misc publishing
2770-2771 Greeting card publishing
2780-2789 Book binding
2790-2799 Service industries for print trade
Fabricated Products
3400-3400 Fabricated metal, except machinery and trans eq
3443-3443 Fabricated plate work
3444-3444 Sheet metal work
3460-3469 Metal forgings and stampings
3470-3479 Coating and engraving
Business Supplies
2520-2549 Office furniture and fixtures
2600-2639 Paper and allied products
2670-2699 Paper and allied products
2760-2761 Manifold business forms
3950-3955 Pens pencils and office supplies
Shipping Containers
2440-2449 Wood containers
2640-2659 Paperboard containers, boxes, drums, tubs
3220-3221 Glass containers
3410-3412 Metal cans and shipping containers
Transportation
4000-4013 Railroads-line haul
4040-4049 Railway express service
4100-4100 Transit and passenger trans
4110-4119 Local passenger trans
4120-4121 Taxicabs
4130-4131 Intercity bus trans (Greyhound)
4140-4142 Bus charter
8
4150-4151 School buses
4170-4173 Motor vehicle terminals, service facilities
4190-4199 Misc transit and passenger transportation
4200-4200 Motor freight trans, warehousing
4210-4219 Trucking
4230-4231 Terminal facilities - motor freight
4240-4249 Transportation
4400-4499 Water transport
4500-4599 Air transportation
4600-4699 Pipelines, except natural gas
4700-4700 Transportation services
4710-4712 Freight forwarding
4720-4729 Travel agencies, etc
4730-4739 Arrange trans - freight and cargo
4740-4749 Rental of railroad cars
4780-4780 Misc services incidental to trans
4782-4782 Inspection and weighing services
4783-4783 Packing and crating
4784-4784 Fixed facilities for vehicles, not elsewhere classified
4785-4785 Motor vehicle inspection
4789-4789 Transportation services
Agriculture
0100-0199 Agric production - crops
0200-0299 Agric production - livestock
0700-0799 Agricultural services
0910-0919 Commercial fishing
2048-2048 Prepared feeds for animals
Food Products
2000-2009 Food and kindred products
2010-2019 Meat products
2020-2029 Dairy products
2030-2039 Canned-preserved fruits-vegs
2040-2046 Flour and other grain mill products
2050-2059 Bakery products
2060-2063 Sugar and confectionery products
2070-2079 Fats and oils
2090-2092 Misc food preps
2095-2095 Roasted coffee
2098-2099 Misc food preparations
Candy Soda
2064-2068 Candy and other confectionery
2086-2086 Bottled-canned soft drinks
2087-2087 Flavoring syrup
2096-2096 Potato chips
2097-2097 Manufactured ice
Beer, Liquor
2080-2080 Beverages
9
2082-2082 Malt beverages
2083-2083 Malt
2084-2084 Wine
2085-2085 Distilled and blended liquors
Tobacco Products
Recreation
2100-2199 Tobacco products
0920-0999 Fishing, hunting & trapping
3650-3651 Household audio visual equip
3652-3652 Phonographic records
3732-3732 Boat building and repair
3930-3931 Musical instruments
3940-3949 Toys
Entertainment
7800-7829 Services - motion picture production and distribution
7830-7833 Services - motion picture theatres
7840-7841 Services - video rental
7900-7900 Services - amusement and recreation
7910-7911 Services - dance studios
7920-7929 Services - bands, entertainers
7930-7933 Services - bowling centers
7940-7949 Services - professional sports
7980-7980 Amusement and recreation services (?)
7990-7999 Services - misc entertainment
Consumer Goods
2047-2047 Dog and cat food
2391-2392 Curtains, home furnishings
2510-2519 Household furniture
2590-2599 Misc furniture and fixtures
2840-2843 Soap & other detergents
2844-2844 Perfumes cosmetics
3160-3161 Luggage
3170-3171 Handbags and purses
3172-3172 Personal leather goods, except handbags
3190-3199 Leather goods
3229-3229 Pressed and blown glass
3260-3260 Pottery and related products
3262-3263 China and earthenware table articles
3269-3269 Pottery products
3230-3231 Glass products
3630-3639 Household appliances
3750-3751 Motorcycles, bicycles and parts (Harley & Huffy)
3800-3800 Misc inst, photo goods, watches
3860-3861 Photographic equip (Kodak etc, but also Xerox)
3870-3873 Watches clocks and parts
3910-3911 Jewelry-precious metals
3914-3914 Silverware
10
3915-3915 Jewelers' findings, materials
3960-3962 Costume jewelry and notions
3991-3991 Brooms and brushes
3995-3995 Burial caskets
Apparel
2300-2390 Apparel and other finished products
3020-3021 Rubber and plastics footwear
3100-3111 Leather tanning and finishing
3130-3131 Boot, shoe cut stock, findings
3140-3149 Footware except rubber
3150-3151 Leather gloves and mittens
3963-3965 Fasteners, buttons, needles, pins
Rubber and Plastic Products
3031-3031 Reclaimed rubber
3041-3041 Rubber & plastic hose and belting
3050-3053 Gaskets, hoses, etc
3060-3069 Fabricated rubber products
3070-3079 Misc rubber products (?)
3080-3089 Misc plastic products
Textiles
3090-3099 Misc rubber and plastic products (?)
2200-2269 Textile mill products
2270-2279 Floor covering mills
2280-2284 Yarn and thread mills
2290-2295 Misc textile goods
2297-2297 Nonwoven fabrics
2298-2298 Cordage and twine
2299-2299 Misc textile products
2393-2395 Textile bags, canvas products
Personal Services
2397-2399 Misc textile products
7020-7021 Rooming and boarding houses
7030-7033 Camps and recreational vehicle parks
7200-7200 Services - personal
7210-7212 Services - laundry, cleaners
7214-7214 Services - diaper service
7215-7216 Services - coin-op cleaners, dry cleaners
7217-7217 Services - carpet, upholstery cleaning
7219-7219 Services - laundry, cleaners
7220-7221 Services - photo studios, portrait
7230-7231 Services - beauty shops
7240-7241 Services - barber shops
7250-7251 Services - shoe repair
7260-7269 Services - funeral
7270-7290 Services - misc
7291-7291 Services - tax return
7292-7299 Services - misc
11
7395-7395 Services - photofinishing labs (School pictures)
7500-7500 Services - auto repair, services
7520-7529 Services - automobile parking
7530-7539 Services - auto repair shops
7540-7549 Services - auto services, except repair (car washes)
7600-7600 Services - Misc repair services
7620-7620 Services - Electrical repair shops
7622-7622 Services - Radio and TV repair shops
7623-7623 Services - Refridg and air conditioner repair
7629-7629 Services - Electrical repair shops
7630-7631 Services - Watch, clock and jewelry repair
7640-7641 Services - Reupholster, furniture repair
7690-7699 Services - Misc repair shops
8100-8199 Services - legal
8200-8299 Services - educational
8300-8399 Services - social services
8400-8499 Services - museums, galleries, botanic gardens
8600-8699 Services - membership organizations
8800-8899 Services - private households
7510-7515 Services - truck, auto rental and leasing
Wholesale
5000-5000 Wholesale - durable goods
5010-5015 Wholesale - autos and parts
5020-5023 Wholesale - furniture and home furnishings
5030-5039 Wholesale - lumber and construction materials
5040-5042 Wholesale - professional and commercial equipment and supplies
5043-5043 Wholesale - photographic equipment
5044-5044 Wholesale - office equipment
5045-5045 Wholesale - computers
5046-5046 Wholesale - commerical equip
5047-5047 Wholesale - medical, dental equip
5048-5048 Wholesale - ophthalmic goods
5049-5049 Wholesale - professional equip and supplies
5050-5059 Wholesale - metals and minerals
5060-5060 Wholesale - electrical goods
5063-5063 Wholesale - electrical apparatus and equipment
5064-5064 Wholesale - electrical appliance TV and radio
5065-5065 Wholesale - electronic parts
5070-5078 Wholesale - hardware, plumbing, heating equip
5080-5080 Wholesale - machinery and equipment
5081-5081 Wholesale - machinery and equipment (?)
5082-5082 Wholesale - construction and mining equipment
5083-5083 Wholesale - farm and garden machinery
5084-5084 Wholesale - industrial machinery and equipment
12
5085-5085 Wholesale - industrial supplies
5086-5087 Wholesale - machinery and equipment (?)
5088-5088 Wholesale - trans eq except motor vehicles
5090-5090 Wholesale - misc durable goods
5091-5092 Wholesale - sporting goods, toys
5093-5093 Wholesale - scrap and waste materials
5094-5094 Wholesale - jewelry and watches
5099-5099 Wholesale - durable goods
5100-5100 Wholesale - nondurable goods
5110-5113 Wholesale - paper and paper products
5120-5122 Wholesale - drugs & propietary
5130-5139 Wholesale - apparel
5140-5149 Wholesale - groceries & related prods
5150-5159 Wholesale - farm products
5160-5169 Wholesale - chemicals & allied prods
5170-5172 Wholesale - petroleum and petro prods
5180-5182 Wholesale - beer, wine
5190-5199 Wholesale - non-durable goods
Retail
5200-5200 Retail - bldg material, hardware, garden
5210-5219 Retail - lumber & other building mat
5220-5229 Retail
5230-5231 Retail - paint, glass, wallpaper
5250-5251 Retail - hardward stores
5260-5261 Retail - nurseries, lawn, garden stores
5270-5271 Retail - mobile home dealers
5300-5300 Retail - general merchandise stores
5310-5311 Retail - department stores
5320-5320 Retail - general merchandise stores (?)
5330-5331 Retail - variety stores
5334-5334 Retail - catalog showroom
5340-5349 Retail
5390-5399 Retail - Misc general merchandise stores
5400-5400 Retail - food stores
5410-5411 Retail - grocery stores
5412-5412 Retail - convenience stores
5420-5429 Retail - meat, fish mkt
5430-5439 Retail - fruite and vegatable markets
5440-5449 Retail - candy, nut, confectionary stores
5450-5459 Retail - dairy product stores
5460-5469 Retail - bakeries
5490-5499 Retail - miscellaneous food stores
5500-5500 Retail - auto dealers and gas stations
5510-5529 Retail - auto dealers
13
5530-5539 Retail - auto and home supply stores
5540-5549 Retail - gasoline service stations
5550-5559 Retail - boat dealers
5560-5569 Retail - recreational vehicle dealers
5570-5579 Retail - motorcycle dealers
5590-5599 Retail - automotive dealers
5600-5699 Retail - apparel & acces
5700-5700 Retail - home furniture and equipment stores
5710-5719 Retail - home furnishings stores
5720-5722 Retail - household appliance stores
5730-5733 Retail - radio, TV and consumer electronic stores
5734-5734 Retail - computer and computer software stores
5735-5735 Retail - record and tape stores
5736-5736 Retail - musical instrument stores
5750-5799 Retail
5900-5900 Retail - misc
5910-5912 Retail - drug & proprietary stores
5920-5929 Retail - liquor stores
5930-5932 Retail - used merchandise stores
5940-5940 Retail - misc
5941-5941 Retail - sporting goods stores, bike shops
5942-5942 Retail - book stores
5943-5943 Retail - stationery stores
5944-5944 Retail - jewelry stores
5945-5945 Retail - hobby, toy and game shops
5946-5946 Retail - camera and photo shop
5947-5947 Retail - gift, novelty
5948-5948 Retail - luggage
5949-5949 Retail - sewing & needlework stores
5950-5959 Retail
5960-5969 Retail - non-store retailers (catalogs, etc)
5970-5979 Retail
5980-5989 Retail - fuel & ice stores (Penn Central Co)
5990-5990 Retail - retail stores
5992-5992 Retail - florists
5993-5993 Retail - tobacco stores
5994-5994 Retail - newsdealers
5995-5995 Retail - computer stores
5999-5999 Retail stores
Restaurants, Hotels, Motels
5800-5819 Retail - eating places
5820-5829 Restaraunts, hotels, motels
5890-5899 Eating and drinking places
7000-7000 Hotels, other lodging places
14
7010-7019 Hotels motels
7040-7049 Membership hotels and lodging
7213-7213 Services - linen
Utilities
4900-4900 Electric, gas, sanitary services
4910-4911 Electric services
4920-4922 Natural gas transmission
4923-4923 Natural gas transmission-distr
4924-4925 Natural gas distribution
4930-4931 Electric and other services combined
4932-4932 Gas and other services combined
4939-4939 Combination utilities
4940-4942 Water supply
Banking
6000-6000 Depository institutions
6010-6019 Federal reserve banks
6020-6020 Commercial banks
6021-6021 National commercial banks
6022-6022 State banks - Fed Res System
6023-6024 State banks - not Fed Res System
6025-6025 National banks - Fed Res System
6026-6026 National banks - not Fed Res System
6027-6027 National banks, not FDIC
6028-6029 Banks
6030-6036 Savings institutions
6040-6059 Banks (?)
6060-6062 Credit unions
6080-6082 Foreign banks
6090-6099 Functions related to deposit banking
6100-6100 Nondepository credit institutions
6110-6111 Federal credit agencies
6112-6113 FNMA
6120-6129 S&Ls
6130-6139 Agricultural credit institutions
6140-6149 Personal credit institutions (Beneficial)
6150-6159 Business credit institutions
6160-6169 Mortgage bankers
6170-6179 Finance lessors
6190-6199 Financial services
Insurance
6300-6300 Insurance
6310-6319 Life insurance
6320-6329 Accident and health insurance
6330-6331 Fire, marine, property-casualty ins
6350-6351 Surety insurance
6360-6361 Title insurance
15
6370-6379 Pension, health, welfare funds
6390-6399 Insurance carriers
6400-6411 Insurance agents
Real Estate
6500-6500 Real estate
6510-6510 Real estate operators
6512-6512 Operators - non-resident buildings
6513-6513 Operators - apartment buildings
6514-6514 Operators - other than apartment
6515-6515 Operators - residential mobile home
6517-6519 Lessors of real property
6520-6529 Real estate
6530-6531 Real estate agents and managers
6532-6532 Real estate dealers
6540-6541 Title abstract offices
6550-6553 Real estate developers
6590-6599 Real estate
6610-6611 Combined real estate, insurance, etc
Trading
6200-6299 Security and commodity brokers
6700-6700 Holding, other investment offices
6710-6719 Holding offices
6720-6722 Investment offices
6723-6723 Management investment, closed-end
6724-6724 Unit investment trusts
6725-6725 Face-amount certificate offices
6726-6726 Unit inv trusts, closed-end
6730-6733 Trusts
6740-6779 Investment offices
6790-6791 Miscellaneous investing
6792-6792 Oil royalty traders
6793-6793 Commodity traders
6794-6794 Patent owners & lessors
6795-6795 Mineral royalty traders
6798-6798 REIT
6799-6799 Investors, NEC
Others
4950-4959 Sanitary services
4960-4961 Steam, air conditioning supplies
4970-4971 Irrigation systems
4990-4991 Cogeneration - SM power producer
Notes: The information presented in this table is taken from Kenneth R. French’s personal website:
http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/Data_Library/det_48_ind_port.html. The numbers associated with
sub-categories are the Standard Industry Classification (SIC) Code. Even more specific information can be found at
http://www.sec.gov/info/edgar/siccodes.htm
16
Supplementary File Table 3. The United States' War Making from 1960 to 2007
COW War Number
COW War Name
Duration
Years
in
Duration in Months
Intensity
163
Vietnam War, Phase 2
1965-1973
96
Major
170
Second Laotian, Phase 2
1968-1973
64
Major
176
Communist Coalition
1970-1971
15
Minor
211
Gulf War
1991
4
Minor
221
War for Kosovo
1999
3
Minor
225
Invasion of Afghanistan
2001
3
Minor
227
Invasion of Iraq
2003
3
Minor
748
Vietnam Phase 1
1961-1965
14
Minor
756
Second Laotian Phase 1
1964-1968
45
Major
766
Dominican Republic
1965
6
Minor
770
First Guatemala
1966-1968
23
Major
785
Khmer Rouge
1971-1973
26
Major
833
Fourth Lebanese Civil
1983-1984
11
Minor
870
Second Somalia
1992-1994
16
Minor
877
Bosnian-Serb Rebellion
1995
2
Minor
932
Waziristan
2004-2006
33
Major
938
Third Somalia
2007
6
Minor
481
Afghan Resistance
200185
Major
482
Iraqi Resistance
200356
Major
Notes: The list is compiled using the Correlates of War (COW) Data Project (Version 4). The major-minor distinction is
based on the authors’ own method. Specifically, any war that lasted more than the mean duration of all the wars listed
here (19 months) is classified as Major; any war that lasted less than the average is categorized as Minor.
17
Supplementary File Table 4. Variable Definitions and Data Sources
Variable
Definition
Profitability (EBITDA)
Earnings before Interests, Taxes, Depreciation and Amortization
(EBITDA) scaled by total assets
Profitability (Net Income)
Earnings after interest payments and taxes, scaled by total assets
ln(War)- Original
The natural logarithm of the cumulative number of months that had
passed from the beginning of a war to the month of war cessation in
that year (if the war ended in that year) or to December of the year (if
the war did not end in that year); in cases of multiple wars during a
given year, we add up the cumulative number of months for each of
the wars.
Data Source
COMPUSTAT
COMPUSTAT
The Correlates of War
Data Project
ln(War)- Casualty
The natural logarithm of the total number of military deaths in a
given year.
For the years of 1980 and
2000, the Defense
Department’s Defense
Casualty Analysis
System:
https://www.dmdc.osd.mil/
dcas/pages/report_by_yea
r_manner.xhtml. For years
of 1960 and 1980,
http://thewallusa.com/summary.asp. For
some specific
wars like the Iraq and
Afghan Wars see
http://icasualties.org/.
ln(War)- Defense Spending
The natural logarithm of the total amount of U.S. defense spending
in constant terms
The World Bank
Development Indicators
Military Contract Revenue
The percentage of a firm’s total revenue coming from defense
contracts
A dummy variable that is equal to “1” for years before 1989, and “0”
otherwise
The number of ongoing interstate, intrastate and extrastate wars in
the international system that the United States was not directly
involved, scaled by the number of state actors in the system
The United States' arm export as a percentage of its GDP
The Top 100 Defense
Contractors by the
Department of Defense
Size
The natural logarithm of market capitalization, which is the shares
outstanding times closing stock price at the end of a fiscal year
COMPUSTAT
Leverage
The sum of long-term debt and short-term debt, scaled by the sum of COMPUSTAT
book value of equity plus long-term debt and short-term debt
Dividend
A dummy variable that is equal to "1" if a firm pays in a given fiscal
year, and "0" otherwise
The number of years since the foudnation of a firm
The natural logarithm of the volume of sales
The natural logarithm of total capital expenditure
18
The natural logarithm of sales scaled by plants and equipment
The natual logarithm of sales scaled by the number of employees
Cold War
International War
Arm Export
Age
ln(Sale)
ln(Investment)
ln(Capital Productivity)
ln(Labor Productivity)
The Correlates of War
Data Project
The World Bank
Development Indicators
COMPUSTAT
COMPUSTAT
COMPUSTAT
COMPUSTAT
COMPUSTAT
COMPUSTAT
Supplementary File Table 5. Descriptive Statistics
Panel A. Descriptive Statistics- Whole Sample
Variable
Obs
Profitability (EBITDA)
171270
Profitability (Net Income)
171270
171270
ln(War)- Original
171270
ln(War)- Casualty
171270
ln(War)- Defense Spending
Military Contract Revenue
336
Cold War
171270
International War
171270
Arm Export
171270
Size
171270
Leverage
171270
Dividend
171270
Age
171270
ln(Sale)
171270
ln(Investment)
171270
ln(Capital Productivity)
171270
ln(Labor Productivity)
171270
Panel B. Selected Descriptive Statistics for Sectors- Arms Sectors
Variable
Obs
Profitability (EBITDA)
2013
Profitability (Net Income)
2013
Size
2013
Leverage
2013
Dividend
2013
Age
2013
ln(Sale)
2013
ln(Investment)
2013
ln(Capital Productivity)
2013
ln(Labor Productivity)
2013
Panel C. Selected Descriptive Statistics for Sectors- Hybrid Sectors
Variable
Obs
65934
Profitability (EBITDA)
Profitability (Net Income)
65969
Size
63647
65755
Leverage
66000
Dividend
Age
66000
ln(Sale)
65179
ln(Investment)
65487
ln(Capital Productivity)
65134
ln(Labor Productivity)
63569
Panel D. Selected Descriptive Statistics for Sectors- Civilian Sectors
Variable
Obs
Profitability (EBITDA)
108023
Profitability (Net Income)
108023
Size
108023
Leverage
108023
19
Mean
0.103
0.005
1.753
0.648
4.608
47.502
0.477
0.156
10.956
4.849
0.392
0.549
14.585
5.112
-3.154
1.408
4.762
Std
0.146
0.162
1.915
0.936
0.147
30.720
0.499
0.047
3.130
2.085
11.871
0.498
11.667
2.004
1.172
1.321
1.080
Min
-0.598
-0.869
0.000
0.000
4.322
0.000
0.000
0.050
5.229
0.599
-1771.333
0.000
0.000
-6.908
-12.710
-9.697
-4.109
Max
0.416
0.273
5.159
3.088
4.837
100.000
1.000
0.320
16.176
10.365
4422.167
1.000
57.000
12.790
-0.872
11.916
13.775
Mean
0.121
0.033
5.081
0.392
0.700
21.205
5.837
-3.183
1.590
4.323
Std
0.095
0.103
2.078
0.513
0.458
14.090
1.969
0.834
0.667
0.798
Min
-0.598
-0.869
0.599
-6.848
0.000
0.000
-0.770
-8.991
-1.703
1.803
Max
0.416
0.273
10.365
15.073
1.000
57.000
11.103
-0.872
5.002
7.257
Mean
0.074
-0.025
5.061
0.397
0.468
13.722
4.784
-3.032
1.132
4.811
Std
0.191
0.207
2.087
17.344
0.499
11.316
2.223
1.059
1.294
1.109
Min
-0.598
-0.869
0.599
-225.004
0.000
0.000
-6.908
-11.134
-9.697
-4.109
Max
0.416
0.273
10.365
4422.167
1.000
58.000
12.790
-0.872
8.344
13.775
Mean
0.112
0.016
4.716
0.385
Std
0.125
0.140
2.067
6.353
Min
-0.598
-0.869
0.599
-1771.333
Max
0.416
0.273
10.365
1028.471
Dividend
108023 0.588
0.492
0.000
1.000
Age
108023 14.688 11.755 0.000
57.000
ln(Sale)
108023 5.253
1.873
-6.908
12.754
ln(Investment)
108023 -3.239 1.241
-12.710
-0.872
ln(Capital Productivity)
108023 1.557
1.328
-9.229
11.916
ln(Labor Productivity)
108023 4.736
1.071
-3.970
12.989
Panel E. Selected Descriptive Statistics for Sectors- Subcategories of Civilian Sectors (Basic Materials Sectors)
Variable
Obs
Mean
Std
Min
Max
Profitability (EBITDA)
1066
0.037
0.175
-0.598
0.416
Profitability (Net Income)
1066
-0.047 0.206
-0.869
0.273
Size
1066
5.358
1.867
0.599
10.365
Leverage
1066
0.287
0.609
-3.991
13.893
1066
Dividend
0.455
0.498
0.000
1.000
Age
1066
13.617 11.126 0.000
50.000
ln(Sale)
1066
4.130
2.065
-5.521
8.976
ln(Investment)
1066
-2.427 1.006
-8.083
-0.872
ln(Capital Productivity)
1066
-0.524 1.281
-7.880
3.603
ln(Labor Productivity)
1066
4.596
1.294
-1.356
9.937
Panel F. Selected Descriptive Statistics for Sectors- Subcategories of Civilian Sectors (Cyclical Consumer Sectors)
Variable
Obs
Mean
Std
Min
Max
Profitability (EBITDA)
38570
0.126
0.110
-0.598
0.416
Profitability (Net Income)
38570
0.023
0.124
-0.869
0.273
Size
38570
4.384
2.033
0.599
10.365
38570
Leverage
0.355
9.137
-1771.333 247.847
Dividend
38570
0.551
0.497
0.000
1.000
Age
38570
14.198 11.017 0.000
58.000
ln(Sale)
38570
5.436
1.799
-4.510
12.836
ln(Investment)
38570
-3.053 1.012
-10.829
-0.872
ln(Capital Productivity)
38570
1.869
1.142
-9.229
8.797
ln(Labor Productivity)
38570
4.545
1.091
-2.223
10.877
Panel G. Selected Descriptive Statistics- Subcategories of Civilian Sectors (Non-Cyclical Consumer Sectors)
Variable
Obs
Mean
Std
Min
Max
Profitability (EBITDA)
10230
0.149
0.105
-0.598
0.416
Profitability (Net Income)
10230
0.046
0.102
-0.869
0.273
Size
10230
4.961
2.221
0.599
10.365
Leverage
10230
0.350
0.434
-20.164
13.217
Dividend
10230
0.732
0.443
0.000
1.000
10230
Age
17.874 12.926 0.000
58.000
ln(Sale)
10230
5.670
1.908
-4.423
11.553
ln(Investment)
10230
-3.078 0.856
-12.710
-0.872
ln(Capital Productivity)
10230
1.645
0.780
-4.482
6.518
ln(Labor Productivity)
10230
4.677
0.936
-1.586
9.039
Panel H. Selected Descriptive Statistics for Sectors- Subcategories of Civilian Sectors (Financial Sectors)
Variable
Obs
Mean
Std
Min
Max
Profitability (EBITDA)
12939
0.067
0.109
-0.598
0.416
Profitability (Net Income)
12939
0.015
0.112
-0.869
0.273
Size
12939
5.017
2.130
0.599
10.365
Leverage
12939
0.455
0.896
-66.016
28.082
12939
Dividend
0.642
0.480
0.000
1.000
Age
12939
11.770 9.515
0.000
58.000
20
ln(Sale)
12939
4.847
2.122
-5.809
ln(Investment)
12939
-4.932 1.718
-11.252
ln(Capital Productivity)
12939
1.945
1.503
-8.338
ln(Labor Productivity)
12939
5.375
1.067
-3.390
Panel I. Selected Descriptive Statistics for Sectors- Subcategories of Civilian Sectors (Industrial Sectors)
Variable
Obs
Mean
Std
Min
Profitability (EBITDA)
39926
0.103
0.149
-0.598
Profitability (Net Income)
39926
0.000
0.175
-0.869
Size
39926
4.748
1.991
0.599
Leverage
39926
0.347
5.351
-225.004
Dividend
39926
0.518
0.500
0.000
Age
39926
14.003 11.351 0.000
ln(Sale)
39926
5.051
1.797
-6.908
ln(Investment)
39926
-3.170 1.046
-11.910
ln(Capital Productivity)
39926
1.661
1.186
-7.787
ln(Labor Productivity)
39926
4.643
0.979
-3.970
Panel J. Selected Descriptive Statistics for Sectors- Subcategories of Civilian Sectors (Utilities Sectors)
Variable
Obs
Mean
Std
Min
Profitability (EBITDA)
7651
0.115
0.041
-0.598
Profitability (Net Income)
7651
0.035
0.041
-0.869
7651
Size
5.982
1.882
0.599
Leverage
7651
0.535
0.245
-0.353
Dividend
7651
0.952
0.213
0.000
Age
7651
26.881 14.458 0.000
ln(Sale)
7651
6.251
1.698
-3.058
ln(Investment)
7651
-2.638 0.562
-8.762
ln(Capital Productivity)
7651
-0.450 0.656
-6.629
ln(Labor Productivity)
7651
5.608
0.804
2.241
21
11.905
-0.872
11.916
12.989
Max
0.416
0.273
10.365
1028.471
1.000
58.000
11.549
-0.872
7.718
12.582
Max
0.323
0.273
10.365
19.306
1.000
57.000
11.457
-0.872
4.840
9.414
S upplementary File Table 6a. Extended Version of Model 1 in Table 2 in the
Manuscript
Hybrid
(Shipbuilding and
Arms (Guns Only) Aircraft Included)
Error Correction Rate (ERC)
Coeff
Profitability t-1
-0.173
*
Std
Coeff
Std
(0.082)
-0.277
*
(0.007)
(0.009)
-0.006
(0.001)
(0.012)
0.047
(0.064)
-0.055
*
*
*
(0.074)
-0.003
Short Run Effect
∆ln(Wart )
-0.008
∆Sizet
0.043
∆Leveraget
-0.133
∆Dividendt
-0.157
*
*
*
(a)
∆Aget
(0.001)
(0.020)
(0.015)
(a)
∆Cold Wart
-0.048
(0.111)
-0.006
(0.007)
∆Arm Export
-0.002
(0.010)
-0.001
(0.001)
0.503
(0.521)
0.212
*
(0.027)
0.002
(0.004)
0.004
(0.001)
Sizet-1
-0.002
(0.002)
0.005
Leveraget-1
-0.041
(0.029)
0.017
*
*
*
Dividendt-1
-0.070
(0.097)
0.009
0.000
(0.000)
0.000
Cold Wart-1
-0.059
(0.115)
0.005
Arm Export t-1
-0.005
(0.005)
0.000
0.219
(0.981)
0.138
∆International War
Long Run Effect
ln(Wart-1)
Aget-1
International Wart-1
*
(0.001)
*
Yes
Year Fixed Effect
Yes
Yes
*
J*T
346
N of Firms
23
R2
(0.005)
0.316
0.016
(0.000)
(0.009)
Yes
0.011
(0.003)
(0.011)
Industry Fixed Effect
Long Run Multiplier effect of
War on Profitability
(0.000)
*
(0.061)
(0.001)
53415
0.232
Adjusted R2
0.184
0.231
Notes : This table is an extended version of Table 2 in the manuscript;
ΔProfitability j,t as the dependent variable; Ordinary Least Square (OLS) regression
results in all columns; j indexes firms; t indexes years (1989-2008); robust
(heteroskedasticity-corrected) standard errors in parentheses; errors clustered by
firm; we estimated coefficients for i-1 industry-specific and t-1 time specific
dichotomous variables, but do not report them here to conserve space; (a) Drops
due to collinearity; Long-run multiplier (LRM ) is the ratio of War’s long run
parameter and the error correction parameter with variance estimates computed
using the formula for approximating the variance of the ratio of two coefficients
reported by DeBoef and Keele (2008);
the 0.05 level.
(a)
drops due to collinearity; *Significant at
22
S upplementary File Table 6b. Extended Version of Model 2 in Table 2 in the Manuscript
Basic M aterials
Std
Cyclical Consumer
Coeff
Std
Non-Cyclical Consumer
Error Correction Rate (ERC)
Coeff
Coeff
Profitability t-1
-0.373 * (0.025)
-0.244
*
(0.008)
-0.261
-0.001
(0.001)
-0.004
(0.001)
-0.004
0.048 * (0.004)
0.039
(0.001)
0.039
-0.108 * (0.037)
-0.106
*
*
*
(0.007)
-0.134
Industrial
Std
Coeff
Std
*
(0.018)
-0.250
*
(0.009)
*
*
*
*
(0.001)
-0.004
(0.001)
(0.003)
0.049
(0.023)
-0.069
*
*
*
(0.036)
-0.021
Short Run Effect
∆ln(Wart)
∆Sizet
∆Leveraget
∆Dividendt
∆Aget
∆Cold Wart
0.044
(0.042)
(a)
-0.027
(0.030)
(a)
-0.037
0.115
(a)
(0.053)
-0.008
∆Arm Export
0.003 * (0.001)
0.001
∆International War
0.401 * (0.061)
0.229
ln(Wart-1)
0.007 * (0.001)
0.004
Sizet-1
0.007 * (0.001)
0.004
Leveraget-1
0.013 * (0.005)
Dividendt-1
0.106 * (0.045)
Aget-1
0.000
(0.000)
0.000
Cold Wart-1
0.005
(0.058)
-0.001
Arm Export t-1
0.006 * (0.002)
0.002
International Wart-1
0.593 * (0.117)
0.206
(0.002)
(0.011)
(0.022)
(a)
(0.004)
-0.001
(0.007)
0.005
(0.008)
*
*
(0.000)
0.001
(0.001)
0.001
(0.001)
(0.023)
0.245
*
(0.052)
0.236
*
(0.031)
*
*
(0.000)
0.002
(0.001)
0.005
0.004
(0.000)
0.004
0.003
(0.003)
-0.002
(0.004)
0.028
*
*
*
(0.001)
(0.000)
*
*
0.000
(0.020)
0.121
(0.038)
0.009
(0.016)
(0.000)
0.000
(0.000)
0.000
(0.000)
(0.006)
0.000
(0.010)
0.016
(0.012)
(0.000)
0.000
(0.001)
0.001
(0.001)
(0.039)
0.219
(0.109)
0.281
(0.070)
Long Run Effect
*
*
*
*
*
*
Industry Fixed Effect
Yes
Yes
Yes
Yes
Year Fixed Effect
Yes
Yes
Yes
Yes
Long Run Multiplier effect
of War on Profitability
0.020 * (0.002)
0.015
*
(0.000)
0.008
*
(0.001)
0.021
*
(0.000)
(0.003)
(0.001)
J*T
7010
37662
10151
28803
N of Firms
966
3663
528
3698
R2
0.270
0.233
0.259
0.236
Adjusted R2
0.263
0.231
0.254
0.234
Notes : This table is an extended version of Table 2 in the manuscript; ΔProfitability j,t as the dependent variable; Ordinary
Least Square (OLS) regression results in all columns; j indexes firms; t indexes years (1989-2008); robust
(heteroskedasticity-corrected) standard errors in parentheses; errors clustered by firm; we estimated coefficients for i-1
industry-specific and t-1 time specific dichotomous variables, but do not report them here to conserve space; (a) Drops due
to collinearity; Long-run multiplier (LRM ) is the ratio of War’s long run parameter and the error correction parameter with
variance estimates computed using the formula for approximating the variance of the ratio of two coefficients reported by
DeBoef and Keele (2008); (a) drops due to collinearity; *Significant at the 0.05 level.
23
S upplementary File Table 6c. Extended Version of Model 2 in Table 2 in the
Manuscript
Financial
Error Correction Rate (ERC)
Coeff
Profitability t-1
-0.262
-0.002
Utilities
Std
Coeff
Std
*
(0.018)
-0.237
*
*
*
(0.001)
-0.001
(0.002)
0.010
(0.011)
-0.120
(0.011)
-0.096
*
(0.029)
Short Run Effect
∆ln(Wart)
∆Sizet
0.027
∆Leveraget
-0.082
∆Dividendt
0.009
(a)
∆Aget
(0.000)
*
*
*
(0.002)
*
(0.002)
(0.017)
(0.030)
(a)
∆Cold Wart
0.011
(0.015)
-0.034
∆Arm Export
0.001
(0.001)
0.000
(0.001)
∆International War
0.113
*
(0.028)
0.007
(0.019)
ln(Wart-1)
0.002
(0.001)
0.000
(0.001)
Sizet-1
0.001
*
*
(0.000)
0.001
Leveraget-1
0.000
Dividendt-1
0.031
Aget-1
Long Run Effect
Cold Wart-1
(0.003)
0.002
(0.006)
-0.019
0.000
(0.000)
0.000
-0.001
(0.016)
-0.009
Arm Export t-1
0.001
International Wart-1
0.169
*
*
*
*
(0.007)
*
*
0.000
(0.001)
(0.059)
0.02
(0.070)
Yes
Year Fixed Effect
Yes
Yes
*
(0.003)
(0.001)
Yes
0.007
(0.007)
(0.000)
Industry Fixed Effect
Long Run Multiplier effect of
War on Profitability
(0.000)
(0.001)
-0.002
*
(0.001)
J*T
29747
9404
N of Firms
1549
413
R2
0.173
0.190
Adjusted R2
0.172
0.185
Notes : This table is an extended version of Table 2 in the manuscript; ΔProfitability j,t as
the dependent variable; Ordinary Least Square (OLS) regression results in all columns; j
indexes firms; t indexes years (1989-2008); robust (heteroskedasticity-corrected) standard
errors in parentheses; errors clustered by firm; we estimated coefficients for i-1 industryspecific and t-1 time specific dichotomous variables, but do not report them here to
conserve space; (a) Drops due to collinearity; Long-run multiplier (LRM ) is the ratio of
War’s long run parameter and the error correction parameter with variance estimates
computed using the formula for approximating the variance of the ratio of two coefficients
reported by DeBoef and Keele (2008); (a) drops due to collinearity; *Significant at the 0.05
level.
24
S upplementary File Table 7a. Extended Version of Model 1 in Table 4 in the
Manuscript- Causalty as Alternate Measure of War
Arms
Hybrid
Error Correction Rate (ERC)
Coeff
Std
Coeff
Profitability t-1
-0.305 * (0.043)
-0.277
-0.006
(0.003)
-0.008
0.044 * (0.006)
0.048
∆Leveraget
-0.138 * (0.034)
-0.054
∆Dividendt
-0.019
(0.087)
-0.004
∆Cold Wart
0.016
(0.016)
0.032
∆Arm Export
0.003
(0.002)
0.000
∆International War
0.388 * (0.121)
0.209
ln(Wart-1)
0.003
(0.003)
0.008
Sizet-1
0.001
(0.001)
0.005
Leveraget-1
-0.008
(0.013)
0.018
Dividendt-1
0.050
(0.087)
0.008
Aget-1
0.000
(0.000)
0.000
Cold Wart-1
-0.030
(0.035)
0.023
Arm Export t-1
-0.002
(0.002)
0.001
0.692 * (0.243)
0.277
Civilian
Std
Coeff
Std
*
(0.007)
-0.207
*
(0.004)
*
*
*
(0.001)
-0.003
(0.000)
(0.001)
0.041
(0.020)
-0.090
*
*
*
(0.015)
-0.006
(0.007)
0.017
(0.001)
0.002
*
(0.030)
0.209
*
*
*
(0.001)
0.007
(0.000)
0.003
(0.003)
0.014
(0.011)
0.021
(0.000)
0.000
(0.009)
0.010
(0.001)
0.002
(0.062)
0.342
Short Run Effect
∆ln(Wart)
∆Sizet
(0.001)
(0.005)
(0.009)
∆Aget
*
*
*
*
(0.004)
*
*
*
*
*
*
*
*
(0.000)
(0.000)
(0.014)
Long Run Effect
International Wart-1
*
*
*
Industry Fixed Effect
Yes
Yes
Yes
Year Fixed Effect
Yes
Yes
Yes
Long Run Multiplier effect
of War on Profitability
0.008 * (0.003)
0.029
*
(0.001)
0.035
*
(0.000)
(0.001)
(0.005)
(0.000)
(0.005)
(0.000)
(0.027)
(0.000)
J*T
2040
51721
138026
N of Firms
131
11,911
10,312
R2
0.303
0.232
0.192
Adjusted R2
0.283
0.231
0.191
Notes : This table is an extended version of Table 4 in the manuscript; ΔProfitability j,t as the
dependent variable; Ordinary Least Square (OLS) regression results in all columns; j indexes
firms; t indexes years (1989-2008); robust (heteroskedasticity-corrected) standard errors in
parentheses; errors clustered by firm; we estimated coefficients for i-1 industry-specific and t-1
time specific dichotomous variables, but do not report them here to conserve space; (a) Drops
due to collinearity; Long-run multiplier (LRM ) is the ratio of War’s long run parameter and the
error correction parameter with variance estimates computed using the formula for
approximating the variance of the ratio of two coefficients reported by DeBoef and Keele
(2008); (a) drops due to collinearity; *Significant at the 0.05 level.
25
S upplementary File Table 7b. Extended Version of Model 2 in Table 4 in the
Manuscript- Defense S pending as Alternate Measure of War
Arms
Hybrid
Error Correction Rate (ERC)
Coeff
Std
Coeff
Profitability t-1
-0.346 * (0.038)
-0.300
-0.001
(0.001)
-0.001
0.037 * (0.006)
0.050
-0.204 * (0.031)
-0.053
Civilian
Std
Coeff
Std
*
(0.008)
-0.221
*
(0.005)
*
*
*
(0.000)
-0.001
(0.000)
(0.002)
0.041
(0.021)
-0.096
*
*
*
Short Run Effect
∆ln(Wart)
∆Sizet
∆Leveraget
∆Dividendt
(0.001)
(0.006)
0.053
(0.079)
-0.002
(0.020)
-0.016
(0.011)
∆Cold Wart
0.000
(0.012)
-0.005
(0.007)
-0.004
(0.004)
∆Arm Export
0.002
(0.002)
-0.001
(0.001)
0.001
∆International War
0.269 * (0.098)
0.043
(0.026)
0.109
(0.000)
0.001
(0.000)
0.003
(0.003)
0.012
(0.014)
0.017
(0.000)
0.000
(0.010)
-0.001
(0.001)
0.000
(0.063)
0.275
∆Aget
*
*
(0.000)
*
*
*
*
*
(0.000)
(0.012)
Long Run Effect
ln(Wart-1)
-0.001
(0.001)
0.000
0.002
(0.001)
0.004
Leveraget-1
-0.011
(0.012)
0.016
Dividendt-1
0.032
(0.101)
0.012
Aget-1
0.000
(0.000)
0.000
Cold Wart-1
-0.028
(0.033)
0.003
Arm Export t-1
-0.003
(0.002)
-0.002
0.591 * (0.233)
0.233
Sizet-1
International Wart-1
*
*
*
*
*
Yes
Yes
Year Fixed Effect
Yes
Yes
Yes
0.001
*
(0.000)
0.001
(0.005)
(0.000)
(0.000)
*
Yes
-0.003 * (0.001)
(0.002)
(0.005)
Industry Fixed Effect
Long Run Multiplier effect
of War on Profitability
(0.000)
*
(0.027)
(0.000)
J*T
1746
41620
112666
N of Firms
131
11,911
10,312
R2
0.345
0.245
0.204
Adjusted R2
0.325
0.244
0.203
Notes : This table is an extended version of Table 4 in the manuscript; ΔProfitability j,t as the
dependent variable; Ordinary Least Square (OLS) regression results in all columns; j indexes
firms; t indexes years (1989-2008); robust (heteroskedasticity-corrected) standard errors in
parentheses; errors clustered by firm; we estimated coefficients for i-1 industry-specific and t1 time specific dichotomous variables, but do not report them here to conserve space; (a)
Drops due to collinearity; Long-run multiplier (LRM ) is the ratio of War’s long run parameter
and the error correction parameter with variance estimates computed using the formula for
approximating the variance of the ratio of two coefficients reported by DeBoef and Keele
(2008); (a) drops due to collinearity; *Significant at the 0.05 level.
26
S upplementary File Table 7c. Extended Version Model 3 of Table 4 in the ManuscriptMajor Wars Only
Arms
Hybrid
Error Correction Rate (ERC)
Coeff
Std
Coeff
Profitability t-1
-0.305 * (0.043)
-0.277
-0.003
(0.003)
-0.006
0.044 * (0.007)
0.047
∆Leveraget
-0.139 * (0.034)
-0.054
∆Dividendt
-0.020
(0.088)
-0.004
-0.005
(0.012)
-0.006
∆Arm Export
0.003
(0.002)
-0.001
∆International War
0.359 * (0.133)
0.200
*
0.002
(0.002)
0.005
*
*
*
Civilian
Std
Coeff
Std
*
(0.007)
-0.207
*
(0.004)
*
*
*
(0.001)
-0.003
(0.000)
(0.001)
0.041
(0.020)
-0.090
*
*
*
(0.015)
-0.006
(0.009)
(0.007)
-0.004
(0.004)
(0.001)
0.001
(0.027)
0.196
(0.001)
0.004
(0.000)
0.003
(0.003)
0.014
(0.011)
0.021
(0.000)
0.000
Short Run Effect
∆ln(Wart)
∆Sizet
(0.001)
(0.005)
∆Aget
∆Cold Wart
*
*
(0.000)
*
*
*
*
*
(0.000)
(0.013)
Long Run Effect
ln(Wart)
Sizet-1
0.001
(0.001)
0.005
Leveraget-1
-0.008
(0.013)
0.018
Dividendt-1
0.049
(0.088)
0.008
Aget-1
0.000
(0.000)
0.000
Cold Wart-1
-0.037
(0.031)
0.008
(0.009)
0.003
Arm Export t-1
-0.001
(0.002)
0.000
(0.001)
0.002
0.544 * (0.228)
0.104
(0.061)
0.203
International Wart-1
*
Yes
Yes
Yes
Year Fixed Effect
Long Run Multiplier effect
of War on Profitability
Yes
Yes
Yes
0.017
*
(0.001)
0.020
(0.001)
(0.005)
(0.000)
(0.005)
*
*
Industry Fixed Effect
0.007 * (0.002)
(0.000)
*
(0.000)
(0.026)
(0.000)
J*T
2040
51721
138026
N of Firms
131
11,911
10,312
R2
0.302
0.231
0.192
Adjusted R2
0.282
0.230
0.191
Notes : This table is an extended version of Table 4 in the manuscript; ΔProfitability j,t as the
dependent variable; Ordinary Least Square (OLS) regression results in all columns; j indexes
firms; t indexes years (1989-2008); robust (heteroskedasticity-corrected) standard errors in
parentheses; errors clustered by firm; we estimated coefficients for i-1 industry-specific and t1 time specific dichotomous variables, but do not report them here to conserve space; (a)
Drops due to collinearity; Long-run multiplier (LRM ) is the ratio of War’s long run parameter
and the error correction parameter with variance estimates computed using the formula for
approximating the variance of the ratio of two coefficients reported by DeBoef and Keele
(2008); (a) drops due to collinearity; *Significant at the 0.05 level.
27
S upplementary File Table 7d. Extended Version of Model 4 of Table 4 in Manuscript
Arms
Civilian
Std
Coeff
Std
Hybrid
Error Correction Rate (ERC)
Coeff
Coeff
Std
Profitability j,t-1
-0.637 * (0.077)
-0.405 * (0.007)
-0.487 * (0.011)
-0.005
-0.005 * (0.000)
-0.009 * (0.001)
Short-Run Effects
∆ln(Wart)
∆Sizej,t
∆Leveragej,t
∆Dividendj,t
∆Agej,t
(0.003)
0.054 * (0.010)
0.064 * (0.001)
0.079 * (0.003)
-0.295 * (0.051)
-0.227 * (0.007)
-0.149 * (0.060)
0.043 * (0.013)
0.052 * (0.023)
0.096
(0.099)
(a)
(a)
(a)
∆Cold Wart
0.057 * (0.026)
-0.011 * (0.006)
0.002
(0.009)
∆Arm Export t
0.003
(0.002)
0.001 * (0.000)
-0.001
(0.001)
∆International Wart
0.492 * (0.151)
0.293 * (0.016)
0.273 * (0.033)
ln(Wart-1)
0.005 * (0.002)
0.007 * (0.000)
0.007 * (0.001)
Sizej,t-1
0.005 * (0.001)
0.006 * (0.000)
0.008 * (0.000)
-0.089 * (0.025)
-0.021 * (0.002)
-0.033 * (0.007)
Long-Run Effect
Leveragej,t-1
Dividendj,t-1
Agej,t-1
0.137
(0.075)
0.027 * (0.007)
0.023
(0.017)
0.000
(0.000)
0.000 * (0.000)
0.001 * (0.000)
-0.030
(0.041)
0.009
0.032 * (0.011)
Arm Export t-1
0.002
(0.002)
0.003 * (0.000)
0.002
(0.001)
International Wart-1
0.691 * (0.266)
0.288 * (0.031)
0.059
(0.073)
Industry Fixed Effect
Yes
Yes
Yes
Year Fixed Effect
Long Run Multiplier (LRM)
Effect of War on Profitability
Yes
Yes
Yes
0.008 * (0.002)
0.016 * (0.000)
0.014 * (0.001)
2,040
141,861
51,857
131
11,911
10,312
R2
0.419
0.294
0.345
Adjusted R2
0.4016
0.294
0.345
Cold Wart-1
J*T
N of Firms
(0.008)
Root M SE
0.081
0.104
0.123
Notes : This is an extended version of Table 4 in the manuscript; ΔProfitability j,t as the dependent
variable and Ordinary Least Square (OLS) regression results in all columns; j indexes firms; t
indexes years (1960-2007); robust (heteroskedasticity-corrected) standard errors in parentheses;
errors clustered by firm; we estimated coefficients for i-1 industry-specific and t-1 time specific
dichotomous variables, but do not report them here to conserve space; long-run multipliers (LRM )
is the ratio of the long-run coefficient for War and the error correction parameter (ß2/ ß0) for each
model with variance estimates computed using the formula for approximating the variance of the
ratio of two coefficients reported by DeBoef and Keele (2008);
*significant at the 0.05 level.
28
(a)
drops due to collinearity;
S upplementary File Table 8a. Exploring Causal Mechanisms: Arms S ectors
Demand Shock
Δl n(Sale)j,t
Δln(Investment)j,t
Supply Shock
Δln(Capital
Productivity)j,t
Δln(Labor
Productivity)j,t
Error Correction Rate (ERC)
ln(Sale)j,t-1
-0.116 * (0.019)
-
ln(Investment)j,t-1
-
ln(Capital Productivity)j,t-1
-
-0.376 *
-
ln(Labor Productivity)j,t-1
-
-
(0.041)
-
-
-
-
-0.122 * (0.022)
-
-0.240 * (0.040)
Short-Run Effect
∆ln(Wart)
-0.028
(0.018)
-0.083 *
(0.039)
0.002
(0.022)
-0.025
(0.016)
∆Cold Wart
0.037
(0.059)
-0.106
(0.220)
0.066
(0.083)
0.032
(0.098)
∆Arm Export t
0.009
(0.007)
-0.012
(0.019)
0.015
(0.009)
0.012
(0.007)
∆International Wart
5.602
(4.793)
11.026
(8.089)
3.773
(5.368)
4.695
(3.815)
∆Sizej,t
0.175 * (0.023)
0.100 *
(0.043)
0.037
(0.025)
-0.014
(0.024)
∆Agej,t
(a)
(a)
-
-0.058
∆Tobinj,t
(a)
(a)
(0.085)
-
-
Long-Run Effect
ln(Wart-1)
0.006
(0.028)
-0.103
(0.063)
0.034
(0.030)
-0.039
(0.030)
Cold Wart-1
0.014
(0.159)
-0.215
(0.286)
0.009
(0.127)
0.004
(0.069)
Arm Export t-1
0.013
(0.007)
-0.048
(0.028)
0.011
(0.014)
0.012
(0.009)
International Wart-1
3.847
(4.320)
-6.014
(14.346)
2.563
(3.275)
17.536 * (3.281)
Sizej,t-1
0.116 * (0.017)
Agejt-1
-0.001 * (0.001)
Tobinjt-1
-
Constant
-0.384
(0.426)
(0.011)
-0.007
(0.004)
0.014 * (0.005)
-0.002
0.023 *
(0.002)
0.000
(0.001)
0.000
0.046
(0.034)
-
-0.181
(1.466)
-0.115
(0.000)
(0.299)
-0.378
(0.213)
Industry Fixed Effect
Yes
Yes
Yes
Yes
Year Fixed Effect
Long Run Multiplier
(LRM) Effect of War
Yes
Yes
Yes
Yes
-0.274 * (0.062)
0.276 * (0.032)
-0.163 * (0.031)
2,019
1,905
2,019
1,880
131
131
131
131
R2
0.236
0.242
0.125
0.191
Adjusted R2
0.214
0.218
0.100
0.166
J*T
N of Firms
0.051
(0.028)
Root M SE
0.243
0.601
0.299
0.207
Notes : This table offers the extended version of the results for Arms Sectors presented in Table 5 in the
manuscipt; Ordinary Least Square (OLS) regression results in all rows; j indexes firms; t indexes years (19602007); robust (heteroskedasticity-corrected) standard errors in parentheses; errors clustered by firm; long-run
multiplier (LRM ) is the ratio of the long-run coefficient for War and the error correction parameter (ß2/ ß0) for
each model with variance estimates computed using the formula for approximating the variance of the ratio of two
coefficients reported by DeBoef and Keele (2008); (a) drops due to collinearity; *significant at the 0.05 level.
29
S upplementary File 8b. Exploring Causal Mechanisms: Civilian S ectors
Demand Shock
Δl n(Sale)j,t
Δln(Investment)j,t
Supply Shock
Δln(Capital
Productivity)j,t
Δln(Labor
Productivity)j,t
Error Correction Rate (ERC)
ln(Sale)j,t-1
-0.110 * (0.003)
-
ln(Investment)j,t-1
-
-0.322 *
ln(Capital Productivity)j,t-1
-
-
ln(Labor Productivity)j,t-1
-
-
(0.005)
-
-
-
-
-0.102 * (0.003)
-
-0.123 * (0.004)
Short-Run Effect
∆ln(Wart)
-0.012 * (0.003)
∆Cold Wart
0.052 * (0.014)
∆Arm Export t
0.004 * (0.001)
0.012 *
(0.003)
∆International Wart
0.370
(0.915)
4.730 *
(1.744)
1.557
∆Sizej,t
0.138 * (0.003)
0.044 *
(0.006)
0.010 * (0.004)
∆Agej,t
(a)
(a)
∆Tobinj,t
-
-0.025 *
(0.006)
-0.001
(0.003)
-0.003
(0.003)
-0.061
(0.039)
0.017
(0.018)
0.025
(0.016)
-0.004 * (0.002)
(1.074)
-0.003 * (0.001)
-0.270
(a)
(a)
-
0.020 *
(0.005)
-0.004
(0.953)
-0.009 * (0.003)
Long-Run Effect
ln(Wart-1)
0.009
(0.005)
0.009
(0.010)
Cold Wart-1
0.064 * (0.020)
-0.072
(0.050)
0.058 * (0.026)
Arm Export t-1
0.007 * (0.002)
(0.003)
-0.006 * (0.002)
International Wart-1
0.833
(2.376)
4.619 * (1.260)
7.600 * (1.098)
Sizej,t-1
0.106 * (0.002)
0.033 *
(0.002)
-0.016 * (0.001)
0.009 * (0.001)
Agejt-1
-0.002 * (0.000)
-0.001 *
(0.000)
0.001
0.055 *
(0.003)
-
Tobinjt-1
-
Constant
-0.071
(1.360)
(0.138)
0.023 *
-4.592
-1.174
(0.235)
Industry Fixed Effect
Yes
Yes
Year Fixed Effect
Long Run Multiplier
(LRM) Effect of War
Yes
Yes
0.079 * (0.005)
0.029
(0.005)
(0.000)
(0.004)
0.051 * (0.021)
-0.001
(0.002)
-0.001 * (0.000)
-
-0.211
(0.127)
Yes
-0.111
(0.110)
Yes
Yes
(0.010)
0.003
-0.039
Yes
(0.005)
0.021 * (0.004)
J*T
140,011
114,015
132,804
120,910
N of Firms
11,911
11,911
11,911
11,911
R2
0.141
0.176
0.061
0.072
Adjusted R2
0.141
0.175
0.060
0.071
Root M SE
0.368
0.721
0.424
0.357
Notes : This table offers the extended version of the results for Civilian Sectors presented in Table 5 in the
manuscipt; Ordinary Least Square (OLS) regression results in all rows; j indexes firms; t indexes years (19602007); robust (heteroskedasticity-corrected) standard errors in parentheses; errors clustered by firm; long-run
multipliers (LRM s) are the ratio of the long-run coefficient for War and the error correction parameter (ß2/ ß0) for
each model with variance estimates computed using the formula for approximating the variance of the ratio of two
coefficients reported by DeBoef and Keele (2008); (a) drops due to collinearity; *significant at the 0.05 level.
30
S upplementary File Table 8c. Exploring Causal Mechanisms: Hybrid S ectors
Demand Shock
Δl n(Sale)j,t
Δln(Investment)j,t
Supply Shock
Δln(Capital
Productivity)j,t
Δln(Labor
Productivity)j,t
Error Correction Rate (ERC)
ln(Sale)j,t-1
-0.127 * (0.005)
-
-
ln(Investment)j,t-1
-
-0.342 *
ln(Capital Productivity)j,t-1
-
-
-0.119 * (0.005)
-
ln(Labor Productivity)j,t-1
-
-
-
-0.161 * (0.007)
(0.007)
-
-
-
Short-Run Effect
∆ln(Wart)
-0.016 * (0.006)
-0.035 *
(0.011)
0.000
(0.006)
-0.019 * (0.006)
∆Cold Wart
0.117 * (0.028)
0.148 *
(0.064)
0.037
(0.036)
0.076 * (0.028)
-0.006
(0.003)
-0.002
(0.003)
4.680 * (1.668)
2.890
(1.488)
∆Arm Export t
-0.001
(0.003)
0.012 *
(0.006)
1.738
(1.497)
4.734
(2.486)
0.078 *
(0.008)
∆International Wart
∆Sizej,t
0.175 * (0.005)
∆Agej,t
(a)
∆Tobinj,t
-
(a)
0.005
(0.007)
0.027 * (0.005)
0.016 * (0.004)
(a)
(a)
-
-
Long-Run Effect
ln(Wart-1)
0.055 * (0.011)
0.021
(0.016)
0.043 * (0.011)
0.015
Cold Wart-1
0.080 * (0.037)
0.064
(0.076)
0.051
0.070 * (0.033)
Arm Export t-1
-0.004
(0.004)
0.008
(0.007)
International Wart-1
-0.400
(1.212)
2.284
(2.456)
(0.044)
-0.011 * (0.004)
2.003
(1.742)
(0.010)
-0.002
(0.003)
10.649 * (1.697)
Sizej,t-1
0.117 * (0.004)
0.041 *
(0.002)
-0.018 * (0.001)
0.012 * (0.001)
Agejt-1
-0.001 * (0.000)
-0.002 *
(0.000)
0.001 * (0.000)
-0.001 * (0.000)
Tobinjt-1
-
0.040 *
(0.004)
-
Constant
-0.044
-1.598 *
(0.281)
-0.144
(0.119)
(0.174)
-0.185
(0.166)
Industry Fixed Effect
Yes
Yes
Yes
Yes
Year Fixed Effect
Long Run Multiplier
(LRM) Effect of War
Yes
Yes
Yes
Yes
0.433
*
(0.011)
0.062 * (0.016)
0.364
(0.011)
0.093
(0.010)
J*T
50,775
49,551
50,692
45,712
N of Firms
10,312
10,312
10,312
10,312
R2
0.214
0.201
0.097
0.113
Adjusted R2
0.213
0.200
0.095
0.111
Root M SE
0.359
0.639
0.390
0.325
Notes : This table offers the extended version of the results for hybrid sectors presented in Table 5 in the
manuscipt; Ordinary Least Square (OLS) regression results in all rows; j indexes firms; t indexes years (19602007); robust (heteroskedasticity-corrected) standard errors in parentheses; errors clustered by firm; long-run
multiplier (LRM ) is the ratio of the long-run coefficient for War and the error correction parameter (ß2/ ß0) for
each model with variance estimates computed using the formula for approximating the variance of the ratio of two
coefficients reported by DeBoef and Keele (2008); (a) drops due to collinearity; *significant at the 0.05 level.
31