The Relationship between Firm Size and Earnings Response Coefficients with Unexpected Benefit in the Companies Listed in Tehran Stock Exchange (TSE)

Nowadays, information is the most part of the investment process. Information causes different decisions made by different people. Investor’s lack of knowledge about the effective factors on investor’s reaction could lead to overact or underact which ultimately would result to investor’s loss. This study examines the relationship between unexpectedProfit and the firm size on Profitresponse coefficient in the companies listed on the Tehran Stock Exchange about which the measurement of Profitresponse coefficient raised from cummulative abnormal returns, the amount of companie’s sales, unexpected profit raised from real and estimated profit and calculating the expected return, Fama and French Models were taken into consideration. For this purpose, about 135 typical companies in various industries listed in Tehran Stock Exchange for the period of 9 years (between 1385-1393) were analyzed (total 1215 firm-year) to study the relationship among variables to test the hypothesis of the study. The results showed that unexpected profit had significant positive correlation on the profit response coefficient on the companies under study and it had negative and meaningful correlation on the Profitresponse of the examined companies.