Effect of default risk on earnings response coefficient with moderating role of board size

Examining the content of accounting profit information has been the attention of researchers for a long time. Profit reaction coefficient explains and identifies different reasons for the market’s reaction to accounting information. One of the information that investors and creditors need when investing in a business entity and also trusting the business entity is to know about the risk of default and the possibility of bankruptcy of the business entity. The purpose of this research is to investigate the impact of default risk on the earnings reaction coefficient (ERC) with the moderating role of the size of the board of directors in the Tehran Stock Exchange. For this purpose, the information of the companies in the period of 9 years from 1392 to 1400 was reviewed and 113 companies were selected. To test the hypotheses of the research, multivariate regression method was used based on the combined data analysis method. The results indicate that the risk of default has a negative and significant effect on the reaction coefficient of profit and the size of the board of directors reduces the negative effect of risk of default on the reaction coefficient of profit.