 Earnings response coefficient

The Earnings Response Coefficient (ERC) is a financial metric that measures the sensitivity of a company's stock price to its earnings announcements. Specifically, it quantifies how much the stock price is expected to change in response to a change in reported earnings per share (EPS). The ERC is used to assess the degree to which investors react to earnings information and can provide insights into market efficiency, investor behavior, and the perceived quality of earnings.