The Effect of Financial Leverage on Earnings Response Coefficient

In this study the effect of "Financial Leverage (FL) on Earning Response Coefficient (ERC)" for accepted members of Tehran Stock Exchange is considered. The purpose is to find out whether or not the investors, analysts, etc. consider the capital structure and leverages of the firms when reacting to the good and bad news caused by revealing the accounting in formation.
Financial   Leverage   measurement   approaches   are   of   two divisions as follows:I)  Income Statement
2) Balance sheet
In this research balance sheet approach i s used. In this approach, two definitions have been considered for leverage.
I)  Debit/ assets Ratio
2) Debit I equity Ratio
Both definitions are used here. Studying the only research hypotheses  using   the  regression   analysis  during  2000-20004 indicates  that  in  the  first  leverage  definition  there  is  a  reverse relationship between  FL & ERC in the whole sample and  in high leverage and  in  the second  definition  i n  high  leverage. However in the first definition in low leverage and i n the second one in the whole sample and in low leverage there's no considerable relationship between ERC and FL.