Companies are mandatory to provide actual information and in compliance with the government financial regulations as their financial statements would tell anything and basis of companies’ assessments. Explorable details in the income statement, in the balance sheet, and in supplemental information helps stakeholders interpret the figures for their economic decisions. Among all factors, earnings reflects financial performance benchmark for the firms, which any improper reporting could mislead stakeholders decision making, particularly in such sophisticated stock market. Earnings Response Coefficient reflect this means and interprets the change in stock prices resulted from the announcement of earnings by the company. ERC supports market efficiency, underlying theories, and usefulness approach to financial reporting as management perceives better understanding of investors’ response to financial statements and how investors could benefit from the published information.
This study investigates the four determinants of the ERC that accounts for Profitability, Investment Opportunity Set, Firm Size, and Capital Structure with the purposive data sampling from published audited financial statements of 29 Manufacturing Consumer Goods Indonesian listed companies period 2016 – 2018. Multiple regression analysis, supporting statistical data analysis are implemented with Eviews 11.0 and Excel 365 to quantify the relationship. The results indicate that profitability, capital structure, and firm size has positive significant effect towards ERC, whereas investment opportunity set has no significant effect towards ERC. This paper expects for future improvements with other variables and ERC models to be tested as ERC is perceivably insightful to improve investors’ and stakeholders’ confidence in their stock investment decisions.

Keywords: Earnings Response Coefficient, Profitability, Investment Opportunity Set, Firm Size, Capital Structure.