Accounting and Auditing Research

Accounting and Auditing Research

Investigating the Effect of Firm Size on Earning Response Coefficient over the companies Life Cycle

Document Type : Original Article

Authors
Vahid Paykan 1
Abdorreza Asadi 2
Alireza Mehrazin 2
Mohammad Karimi 3
1 PhD Candidate of Department of Accounting, Ne.C., Islamic Azad University, Neyshabur, Iran.
2 Associate Professor of Department of Accounting, Ne.C., Islamic Azad University, Neyshabur, Iran.
3 Assistant Professor of Department of Management, Ne.C., Islamic Azad University, Neyshabur, Iran.
10.22034/iaar.2026.244180
Abstract
Abstract: Since the first published research on Earning Response Coefficient (ERC), one of the most important directions of studies in financial accounting is about explaining and identifying different factors affecting ERC for different companies. Also, based on the research, it can be shown that the financial characteristics are not the same in different stages of the life cycle and it changes depending on the stage in which it is placed. Therefore, the financial characteristics are influenced by the stage of the life cycle in which the company is located, therefore, the firm life cycle model can be used as a key for stronger forecasting as well as making decisions more logically. Therefore, in current research, the relationship between firm size and ERC during the firm's life cycle admitted to the Tehran Stock Exchange is studied. This research is a type of applied research in which the financial data of 151 Tehran Stock Exchange companies during the period of 2013 to 2022, including 1510 observations, were examined. The findings show that since shareholders are more interested in the information disclosed by larger companies, they react more to this information, which affects the price and return of stocks. Therefore, the larger the company, the higher the expected ERC. The results also show that the life cycle is an influential factor in the relationship between company size and ERC, so that in each stage of the life cycle, the explanatory effect of company size on ERC changes.
Keywords
Earning Response Coefficient
Firm Size
Firm Life Cycle
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Accounting and Auditing Research
Volume 18, Issue 69
Spring 2026
Pages 93-114