PROFITABILITY, COMPANY SIZE, AND PROFIT PERSISTENCE INFLUENCE EARNING RESPONSE COEFFICIENT

Abstract

The purpose of this study is to find out how Profitability, Firm Size, and Profit Persistence affect the
Earnings Response Coefficient. In this research, the sample is made up of companies in the consumer
goods sector that were listed on the Indonesia Stock Exchange from 2017 to 2021. The sample is made
up of 16 companies that meet the sample criteria, which were set using a method called "purposive
sampling." Profitability, as measured by the Return on Assets ratio, company size, as measured by the
Natural Logarithm, and profit persistence, as measured by the regression coefficient between earnings
in the current period and earnings in the past period, are the independent variables of this study. The
Earnings Response Coefficient, which is measured by Abnormal Return and a few other stages, is the
thing that this study is based on. The study's results show that: (1) Profitability has a small positive
effect on the earnings response coefficient; (2) Firm size has a negative and significant effect on the
earnings response coefficient; and (3) Profit persistence has a negative and significant effect on the
earnings response coefficient