Earnings Response Coefficient: Earnings Persistence Moderated by Capital Structure and Economic Growth

Abstract

Purpose: The influence of earnings persistence on ERC in companies listed in Indonesia Stock Exchange.

Methodology/approach: R-Studio has been used as a measuring tool in the focus of the research on publicly traded entities to find insightful knowledge in relation to companies subject to the dynamics of the market and under the scrutiny of investors.

Results/findings: The results tend to indicate that when a firm is capable of reporting a high level of earnings sustainably and catches the attention of investors, the market's response to the firm does not tend to be negative.

Limitations: This research applies a purposive sampling method, with the explicit selection of companies listed on the Indonesia Stock Exchange for an 11-year period-from 2011 to 2021-in line with specific criteria.

Contribution: These findings are adding to our understanding of the stock market pricing processes and contribute to earnings announcement literature

Novelty: the goodness of the GDP growth rate may also spill over to market perception regarding the capability of companies' earnings and, hence, further reinforces the earnings-ERC relationship