Credible Disclosure of Industry-Wide Information Through Trade Associations: Evidence from the Semiconductor Industry

39 Pages Posted: 18 Nov 1996

See all articles by Chandra Uday

Chandra Uday

University of Oklahoma - School of Accounting

Andrew Procassini

Santa Clara University

Gregory B. Waymire

Emory University - Department of Accounting

Date Written: August 1996

Abstract

Prior analytical research suggests that competitive firms within an industry may not voluntarily share their private market information through a trade association. Given legal restrictions which preclude trade associations from compelling participation or accurate reporting by firms or revealing their proprietary data, it is uncertain whether trade associations can design and implement systems to collect and transmit useful market information. This paper documents significant stock price movements on release dates of aggregate industry data on new orders and shipments by the Semiconductor Industry Association (SIA) each month which are positively associated with changes in the numbers disclosed. The industry information released is positively correlated with earnings changes in the subsequent quarterly earnings announcements of firms within the industry. Additional tests indicate that semiconductor firms? stock prices respond significantly to their quarterly earnings announcements, and that the prior disclosure of aggregate industry information does not materially reduce the valuation relevance of earnings reports of semiconductor firms . Overall, these findings support the hypothesis that trade associations are able to obtain reliable data from firms, aggregate it into statistics that do not reveal a specific company?s information, and then distribute aggregate statistics back to participating firms in a timely manner. Our analysis further suggests that while the aggregate industry data are informative for investors in high-tech stocks, they do not reduce the valuation impact of semiconductor firms? quarterly earnings.

JEL Classification: D82, G12, M41, L83

Suggested Citation

Uday, Chandra and Procassini, Andrew and Waymire, Gregory B., Credible Disclosure of Industry-Wide Information Through Trade Associations: Evidence from the Semiconductor Industry (August 1996). Available at SSRN: https://ssrn.com/abstract=2313 or http://dx.doi.org/10.2139/ssrn.2313

Chandra Uday (Contact Author)

University of Oklahoma - School of Accounting ( email )

Norman, OK 73019-0450
United States
Not Available (Phone)
Not Available (Fax)

Andrew Procassini

Santa Clara University

Santa Clara, CA 95053
United States

Gregory B. Waymire

Emory University - Department of Accounting ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States
404-727-6589 (Phone)
404-727-6313 (Fax)

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