Matching two lists of companies base on size and book-to-market value

[Jeffrey Choi]

Hi Statalist,

I am currently doing my Master thesis and would need some help on a matching approach.
I have a list of treated companies and a list of control companies, each list consist of 4 variables (company name, company code, size and book-to-market value). My ultimate aim is to match each treated company with a least one control firm basing on the following criteria:
1) (-0.25,+0.25) of book-to-market value
2) (-10%, 10%) of size

I used the -rangejoin- command to match the two data lists basing on book-to-market value (bmv)

use treated_list.dta, clear
rangejoin bmv -0.25 0.25 using control_list.dta, suffix(_control)

And I get:

* Example generated by -dataex-. To install: ssc install dataex
clear
input str77 name str9 RIC double(size bmv) str68 name_control str9 RIC_control double size_control float bmv_control
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Kingland Technology Co Ltd"                                        "000711.SZ" 1355075201 2.07
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangdong Sunwill Precising Plastic Co Ltd"                        "002676.SZ"  329331046 2.07
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "TIZA Information Industry Corporation INC"                         "300209.SZ"  665832855 2.07
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Anhui Wantong Technology Co Ltd"                                   "002331.SZ"  434228382 2.07
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Warom Technology Incorporated Co"                                  "603855.SS"  453786858 2.07
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "China Fangda Group Co Ltd"                                         "000055.SZ"  850662958 2.08
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Ningbo Tuopu Group Co Ltd"                                         "601689.SS" 2073757166 2.08
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Luxin Venture Capital Group Co Ltd"                                "600783.SS" 1123396483 2.08
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Chongqing Sanxia Paints Co Ltd"                                    "000565.SZ"  335889778 2.08
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Chuying Agro-Pastoral Group Co Ltd"                                "002477.SZ" 1601397854 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Scimee Sci &Tech Co Ltd"                                           "300425.SZ"  474353008 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shanghai Zhangjiang Hi-Tech Park Development Co Ltd"               "600895.SS" 2710123066 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangdong Ellington Electronics Technology Co Ltd"                 "603328.SS" 1497231611 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhejiang Hailide New Material Co Ltd"                              "002206.SZ"  926064370 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Olympic Circuit Technology Co Ltd"                                 "603920.SS"  756250521 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Yantai Zhenghai Magnetic Material Co Ltd"                          "300224.SZ"  954403391 2.09
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Tiansheng Pharmaceutical Group Co Ltd"                             "002872.SZ" 1017199017  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shanghai Beite Technology Co Ltd"                                  "603009.SS"  439507989  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jinling Hotel Corp Ltd"                                            "601007.SS"  475911237  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Asia Cuanon Technology Shanghai Co Ltd"                            "603378.SS"  418446344  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hubei Forbon Technology Co Ltd"                                    "300387.SZ"  254708917  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Jingshen Salt & Chemical Industry Co Ltd"                  "603299.SS"  690730703  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangzhou Tech-Long Packaging Machinery Co Ltd"                    "002209.SZ"  205764594  2.1
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jilin Zixin Pharmaceutical Industrial Co Ltd"                      "002118.SZ" 1347793243 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shen Zhen Bauing Construction Holding Group Co Ltd"                "002047.SZ" 1218739031 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hunan New Wellful Co Ltd"                                          "600975.SS"  392333537 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shandong Lubei Chemical Co Ltd"                                    "600727.SS"  378577181 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "SVG Group Co Ltd"                                                  "300331.SZ"  455499959 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "XiAn Qujiang Cultural Tourism Co Ltd"                              "600706.SS"  309293785 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Anhui Truchum Advanced Materials and Technology Co Ltd"            "002171.SZ" 1118673901 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Huali Industries Co Ltd"                                           "603038.SS"  305536719 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Chengdu Huaze Cobalt & Nickel Material Co Ltd"                     "000693.SZ"  277608448 2.11
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "COFCO Tunhe Sugar Co Ltd"                                          "600737.SS" 2355854284 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shandong Haihua Co Ltd"                                            "000822.SZ"  926725063 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Tianjin Guangyu Development Co Ltd"                                "000537.SZ" 3163058846 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shandong Linglong Tyre Co Ltd"                                     "601966.SS" 2851763834 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Yunnan Luoping Zinc & Electricity Co Ltd"                          "002114.SZ"  589878716 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hainan Mining Co Ltd"                                              "601969.SS" 1612999934 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Wuxi Xuelang Environmental Technology Co Ltd"                      "300385.SZ"  361274495 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangxi Radio and Television Information Network Corp Ltd"         "600936.SS" 1195563717 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Beijing Shengtong Printing Co Ltd"                                 "002599.SZ"  504469867 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Sichuan Star Cable Co Ltd"                                         "603333.SS"  465258750 2.12
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "China Science Publishing & Media Ltd"                              "601858.SS" 1068854016 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Zongyi Co Ltd"                                             "600770.SS" 1157526002 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Beijing Airport High-Tech Park Co Ltd"                             "600463.SS"  459245085 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhejiang Huafon Spandex Co Ltd"                                    "002064.SZ" 1115244591 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Beijing Hanbang Technology Corp"                                   "300449.SZ"  393312385 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Newcapec Electronics Co Ltd"                                       "300248.SZ"  448411880 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hangzhou Cable Co Ltd"                                             "603618.SS"  655058740 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Anyuan Coal Industry Group Co Ltd"                                 "600397.SS"  261231350 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "China Railway Tielong Container Logistics Co Ltd"                  "600125.SS" 1732583580 2.13
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Brother Enterprises Holding Co Ltd"                                "002562.SZ"  755700979 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhuhai Hokai Medical Instruments Co Ltd"                           "300273.SZ"  796187193 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Fujian Furi Electronics Co Ltd"                                    "600203.SS"  679948424 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangdong Anjubao Digital Technology Co Ltd"                       "300155.SZ"  377847991 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Sichuan Nitrocell Co Ltd"                                          "002246.SZ"  743038045 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Xinjiang Guannong Fruit & Antler Group Co Ltd"                     "600251.SS"  646424660 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Beijing Leadman Biochemistry Co Ltd"                               "300289.SZ"  432888693 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "VGRASS Fashion Co Ltd"                                             "603518.SS"  542202530 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Xinning Modern Logistics Co Ltd"                           "300013.SZ"  453106895 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Suzhou Electrical Apparatus Science Academy Co Ltd"                "300215.SZ"  656221458 2.14
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhongtian Financial Group Co Ltd"                                  "000540.SZ" 5335535405 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "TongKun Group Co Ltd"                                              "601233.SS" 4453970718 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Beijing Dabeinong Technology Group Co Ltd"                         "002385.SZ" 3389779222 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Gansu Mogao Industrial Development Co Ltd"                         "600543.SS"  373654999 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Huahong Technology Co Ltd"                                 "002645.SZ"  556811166 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Kuangshun Photosensitivity New-Material Stock Co Ltd"      "300537.SZ"  408050522 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shanghai Pret Composites Co Ltd"                                   "002324.SZ"  749830036 2.15
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "JiLin Sino-Microelectronics Co Ltd"                                "600360.SS"  709625991 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Chengdu Xinzhu Road&Bridge Machinery Co Ltd"                       "002480.SZ"  777610728 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Grandblue Environment Co Ltd"                                      "600323.SS" 1773775746 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Cangzhou Mingzhu Plastic Co Ltd"                                   "002108.SZ" 1053917357 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhongzhu Healthcare Holding Co Ltd"                                "600568.SS" 1995883495 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shandong Denghai Seeds Co Ltd"                                     "002041.SZ"  938296787 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Emei Shan Tourism Co Ltd"                                          "000888.SZ"  735053615 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Kanion Pharmaceutical Co Ltd"                              "600557.SS" 1165016727 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shijiazhuang Kelin Electric Co Ltd"                                "603050.SS"  326425999 2.16
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Inspur Software Co Ltd"                                            "600756.SS"  719685237 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Oriental Energy Co Ltd"                                            "002221.SZ" 2553520219 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Chongqing Lummy Pharmaceutical Co Ltd"                             "300006.SZ"  566545823 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhejiang Huatie Construction Safety Science and Technology Co Ltd" "603300.SS"  382459687 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Jiangsu Lianhuan Pharmaceutical Co Ltd"                            "600513.SS"  294221148 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Zhejiang Yongtai Technology Co Ltd"                                "002326.SZ"  898500337 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hangcha Group Co Ltd"                                              "603298.SS" 1168910706 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "BOCO Inter-Telecom Co Ltd"                                         "600289.SS"  237611037 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shandong Cynda Chemical Co Ltd"                                    "603086.SS"  374704484 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Fujian Nanping Sun Cable Co Ltd"                                   "002300.SZ"  445536248 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Luyin Investment Group Co Ltd"                                     "600784.SS"  479386064 2.17
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Daodaoquan Grain and Oil Co Ltd"                                   "002852.SZ"  647551496 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shanghai Tongji Science&Technology Industrial Co Ltd"              "600846.SS"  697043584 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Qtone Education Group Guangdong Co Ltd"                            "300359.SZ"  697323811 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hunan Dakang International Food & Agriculture Co Ltd"              "002505.SZ" 1870725064 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Miracle Automation Engineering Co Ltd"                             "002009.SZ"  665596032 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Guangdong Silver Age Sci &Tech Co Ltd"                             "300221.SZ"  749925341 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Fujian Sanmu Group Co Ltd"                                         "000632.SZ"  428738682 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Shanghai Diesel Engine Co Ltd"                                     "600841.SS"  940657286 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Furen Pharmaceutical Group Industry Co Ltd"                        "600781.SS" 1545585856 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "JIANGSU LOPAL TECH Co Ltd"                                         "603906.SS"  399667998 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Hangzhou Zhongheng Electric Co Ltd"                                "002364.SZ"  790748356 2.18
"China Vanke Co Ltd" "000002.SZ" 46587709608 2.31 "Ningxia Orient Tantalum Industry Co Ltd"                           "000962.SZ"  372111132 2.18
end

Although the example above shows only 1 treated company (China Vanke Co Ltd), I have matched all the rest of my treated list with a least one controlled firm. Now I would want to further match in terms of size but choosing the controlled companies from the matched companies above, is there a way to do this? Or is there another code which allow me to match in term of both variables (size and bmv) at once? Thank you in advance.

Kind regards
Jeffrey

[Clyde Schechter]

keep if inrange(size_control, 0.9*size, 1.1*size)

[Jeffrey Choi]

Thank you for the quick respond, Clyde. Can't believe I missed this simple code

[summer jia]

Clyde, if I need to match each treated company with a control firm based on (-0.25,+0.25) or (-20%, 20%) of book-to-market value, how should I revise this code?

[Clyde Schechter]

Assuming that "match each treated company with a control firm based on (-0.25,+0.25) or (-20%, 20%) of book-to-market value" really means that you want the control firm's book to market to be within 0.25 of the case firms size AND that the control firm's size is within 20% of the case firm's:

use treated_list.dta, clear
rangejoin bmv -0.25 0.25 using control_list.dta, suffix(_control)

would require no modification as you are using the same criterion here.

keep if inrange(size_control, 0.9*size, 1.1*size)

would change to

keep if inrange(size_control, 0.75*size, 1.25*size)

If, however, you really did mean OR when you said or, then a different approach is needed, because -rangejoin- can't do that. In that case, instead of rangejoin you would use:

use control_list, clear
rename (*) =_control
tempfile controls
save `controls'

use treated_list, clear
cross using `controls'
keep if abs(bmv-bmv_control) < 0.25 | inrange(size_control, 0.75*size, 1.25*size)

This approach may run into problems with available memory if either of these data sets is large, and there is no truly easy solution to that problem. I will also point out that while there is, in principle, no reason you can't use this as a matching criterion, it is a very unusual one. In fact, I have never before seen matching on the basis of a "this OR that" criterion; it is almost always a "this AND that" criterion that is wanted.