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The Use of Trade Association Disclosures by Investors and Analysts: Evidence from the Semiconductor Industry

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  • UDAY CHANDRA
  • ANDREW PROCASSINI
  • GREGORY WAYMIRE

Abstract

This paper investigates the relation between industry†wide information disclosures by the trade association for the semiconductor industry and both share prices and analyst forecasts. Such disclosures may have little impact on investors and analysts, since prior theoretical research suggests that trade associations may be unable to secure reliable data from firms in an industry. At the same time, such disclosures may be important, since prior empirical research suggests that share prices and analyst forecasts reflect industry†wide earnings effects earlier than firm†specific effects. We document significant stock price movements on release dates of industry Flash Reports by the Semiconductor Industry Association (SIA) each month that contain aggregate industry data on new orders and shipments. The magnitude of the price revisions on Flash Report disclosure dates is positively associated with changes in the numbers disclosed and varies across sample firms in a manner associated with identifiable characteristics of the firms. Further tests indicate that the Flash Report provides mainly forward†looking information on new orders that is linked to firm†specific sales changes and has explanatory power for quarterly stock prices beyond firm†specific earnings. This information is used by security analysts mainly in assessing the persistence of firm†specific quarterly sales changes. Our findings support the hypothesis that the SIA is able to obtain data from firms, compile it into reliable aggregate statistics, and then distribute these statistics in a timely fashion.

Suggested Citation

  • Uday Chandra & Andrew Procassini & Gregory Waymire, 1999. "The Use of Trade Association Disclosures by Investors and Analysts: Evidence from the Semiconductor Industry," Contemporary Accounting Research, John Wiley & Sons, vol. 16(4), pages 643-670, December.
  • Handle: RePEc:wly:coacre:v:16:y:1999:i:4:p:643-670
    DOI: 10.1111/j.1911-3846.1999.tb00599.x
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    References listed on IDEAS

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    Cited by:

    1. Elena Beccalli & Peter Miller & Ted O'leary, 2015. "How Analysts Process Information: Technical and Financial Disclosures in the Microprocessor Industry," European Accounting Review, Taylor & Francis Journals, vol. 24(3), pages 519-549, September.
    2. Chan, Kalok & Hameed, Allaudeen, 2006. "Stock price synchronicity and analyst coverage in emerging markets," Journal of Financial Economics, Elsevier, vol. 80(1), pages 115-147, April.
    3. Beccalli, Elena & Miller, Peter & O'Leary, Ted, 2015. "How analysts process information: technical and financial disclosures in the microprocessor industry," LSE Research Online Documents on Economics 60072, London School of Economics and Political Science, LSE Library.
    4. Maggie Hao & Dana A. Forgione & Liang Guo & Hongxian Zhang, 2017. "Improvement in clinical trial disclosures and analysts’ forecast accuracy: evidence from the pharmaceutical industry," Review of Quantitative Finance and Accounting, Springer, vol. 49(3), pages 785-810, October.
    5. Hong, Philip Keejae & Lee, Sam & Mynatt, Patricia & Ramakrishnan, Ram, 2019. "The value relevance of timely information: The case of comparable store sales growth," Advances in accounting, Elsevier, vol. 44(C), pages 10-21.
    6. Ramnath, Sundaresh & Rock, Steve & Shane, Philip, 2008. "The financial analyst forecasting literature: A taxonomy with suggestions for further research," International Journal of Forecasting, Elsevier, vol. 24(1), pages 34-75.
    7. Jeremy Bertomeu & Pierre Jinghong Liang, 2015. "Disclosure Policy and Industry Fluctuations," Management Science, INFORMS, vol. 61(6), pages 1292-1305, June.
    8. He, Guanming & Li, April Zhichao, 2024. "Does media coverage of firms' environment, social, and governance (ESG) incidents affect analyst coverage and forecasts? A risk perspective," International Review of Financial Analysis, Elsevier, vol. 94(C).
    9. Douglas Skinner, 2008. "Accounting for intangibles – a critical review of policy recommendations," Accounting and Business Research, Taylor & Francis Journals, vol. 38(3), pages 191-204.

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