Markets
Platforms
Accounts
Investors
Partner Programs
Institutions
Contests
loyalty
Trading Tools
Resources
The Earnings Response Coefficient (ERC) measures the relationship between a company’s earnings announcements and the corresponding change in its stock price. It reflects how strongly investors react to unexpected earnings news, indicating the sensitivity of a stock’s price to its earnings results. A high ERC suggests that investors react significantly to earnings surprises, while a low ERC indicates a muted response. ERC is used by investors and analysts to understand the market’s perception of a company’s earnings quality and its impact on stock prices.
If a company reports earnings much higher than expected and its stock price jumps, it has a high ERC, showing strong investor reaction to earnings surprises.
• Measures how stock prices respond to earnings announcements.
• High ERC means strong investor reaction; low ERC means weaker response.
• Indicates the market’s perception of a company’s earnings quality.
ERC measures the relationship between a company’s earnings announcements and the change in its stock price.
It helps investors understand how sensitive a stock is to earnings news, indicating the market’s perception of earnings quality.
A high ERC indicates that the stock price responds strongly to earnings surprises, reflecting significant investor reaction.
Start Your Journey
Put your knowledge into action by opening an XS trading account today
Register to our Newsletter to always be updated of our latest news!
