Market share & market size (per SIC code)
Posted: 18 April 2014 08:09 AM   [ Ignore ]
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Hi everybody,

I am new here and would appreciate your help regarding a search query in COMPUSTAT.

I need the market shares for a certain sample of firms. I was thinking of obtaining it via COMPUSTAT by using:

1) Firm Sales (per industry):

Here I was thinking that I have to use the Firm Sales per SIC code as Total Firm Sales might give me wrong results for a diversified firm.

2) Total Industry Sales (i.e. market size)

To obtain the total market I thought of adding up all reported sales (again per SIC) in the COMPUSTAT database

Therefore,
Sales (per industry) / Total Industry Sales =! Market share

Could you maybe tell me how I find the Sales per industry (SIC) variable in COMPUSTAT. I know that it exists and I have read that around 70% of the firms should have this information in the database (after 2000).

Or can you think of another (more accurate) way to find the market share (and market size)?

Thank you so much!

Felix

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Posted: 13 May 2014 12:32 PM   [ Ignore ]   [ # 1 ]
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hi Felix,

Sorry for my late reply; I normally receive email notifications, but it looks like I missed yours.

In any event; adding the sales by industry (for example by SIC or SICH) would lead to total industry sales. At least, the industry sales based on listed firms. You are right to say that summing the info in Fundamental Annual will be somewhat off because of firms operating in multiple industries. So, a more precise approach would be to use the sales for each segment. This info is in wrds_segmerged. (http://wrds-web.wharton.upenn.edu/wrds/tools/variable.cfm?library_id=7&file_id=65809) The segment table has info on sales as well as industry codes for each segment.

The segment table is a bit ‘tricky’ to use, as it is easy to count items double. For example, firms may disclose GEO segment as well as business segments. You would need only business segments and exclude GEO segments. Also, segment disclosures in the 10-K typically include 3 years, and every year these 3 years are included in the segment table (so you need to pick a year - typically the first year, or the last). And, you probably need to exclude ‘headquarters’ or eliminations. Code that will help you get started is here: http://www.wrds.us/index.php/repository/view/34 (this macro counts the number of business segments, but with some changes you can use it to get to the segment sales).

hope this helps,

Joost

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