The Factors that Affect Earnings Response Coefficient on Miscellaneous Industry Manufacturing Sectors Company on the Indonesia Stock Exchange

Abstract

Research aims to understand the influence of characteristic companies variables to earnings response coefficient. Earnings response coefficient is the coefficient that obtained from regression between proxy of stock price and accounting profit. Based on fundamental theory and previous research, hypothesis in this research are: (1) the firm size increase earnings response coefficient, (2) profitability increase earnings response coefficient, (3) the growth opportunities increase earnings response coefficient, and (4) leverage lower earnings response coefficient.

Population in this research is all companies manufacturing sector from miscellaneous industry that listed at the Indonesian stock exchange. Of 42 company population, 15 company chosen to sample for years 2010 until 2014 by using the purposive sampling method. The analysis technique used in this research is multiple regression. The result confirm signalling theory and efficient market theory that explains that the information published by the company will responded by investors.

Keywords: earnings response coefficient

JEL Classification: R53