Earning response coefficients of public listed companies in Malaysia /Abang Ramblee Abang Khaider

This paper investigates the relationship between reported earnings and share prices, focusing on the slope coefficients resulting from a regression of earnings and share price over a twelve-month period among Malaysian companies. The regression slope referred to as earning response coefficient (ERC) measures investors' response to accounting earnings reported in the financial statements and also a proxy o the investors' perception of the level of earning quality. In consistent with previous studies, the study found that reported earnings are significantly associated with share prices throughout the study period except for 1999. It is also found that there is evidence to show that the level of earnings quality has improved with the implementation of MCCG in Malaysia commencing March 2000.