EFFECT OF DEFAULT RISK, ACCOUNTING CONSERVATISM, PROFIT PERSISTENCE AND AUDIT QUALITY ON EARNINGS RESPONSE COEFFICIENT (ERC) IN NON-FINANCIAL COMPANIES REGISTERED ON THE INDONESIAN STOCK EXCHANGE (IDX) IN 2019-2021

This study aims to examine the effect of default risk, accounting conservatism, earnings persistence and audit quality on earnings response coefficient (ERC). The population in this study are non-financial companies listed on the Indonesia Stock Exchange (IDX) for 2019-2021 with a total of 673 companies. Sampling in this study used purposive sampling and obtained as many as 118 companies with 354 observational data. This research is a quantitative research with secondary data sources including the company's annual financial reports obtained through the websitewww.idx.co.idand stock prices obtained through the sitehttp://finance.yahoo.com. Data collection techniques in this study are the method of documentation and literature study.Data analysis in this study used panel data regression using EViews 12 software. The results showed that default risk had no significant effect on earnings response coefficient (ERC), accounting conservatism and earnings persistence had no significant positive effect on earnings response coefficient (ERC). And audit quality has a negative and significant effect on earnings response coefficient (ERC).


Figure 1 Profit Data for the Year, Share Price and ERC Value (In Annual)
From the above phenomenon, it can be seen that the market response is not only seen from the profit side, meaning that profit alone is not enough to serve as the only basis for investors in making decisions. This indicates that there are other factors related to the company that affect investors' decisions. Earnings response coefficient (ERC) is an indicator that can be used to see how much the market responds to earnings information announced by the company (Irwan & Cahyaningsih, 2020). Scott explained that the information content of earnings can be seen by using the Earnings Response Coefficient (ERC), namely by describing and identifying differences in market reactions to market announcements. The magnitude of the relationship between earnings and stock returns is called the Earnings Response Coefficient (BG Siregar, 2018).
There are several factors that affect the earnings response coefficient (ERC), the first is default risk. Default risk is the company's failure to pay interest or principal on a timely basis. Default risk is a specific risk for each company so that it can affect the magnitude of the relationship between earnings and company stock returns (Eldest & Muslih, 2019). Uncertainty of risk will make investors more careful in making decisions about companies that have high risk. Results of research conducted (Darmawan et al., 2022) And (Goddess, 2020)proves that Default Risk affects the earnings response coefficient (ERC). However, these results are different (Eldest & Muslih, 2019) And (Fersela et al., 2021) which states that default risk has no effect on the earnings response coefficient. Besides default risk, another factor that influences the earnings response coefficient is accounting conservatism. According to Ratna (2004) accounting conservatism is a prudent reaction in the face of uncertain risks in the future. (Tjandra, 2020). The practice of accounting conservatism can be used to slow down revenue recognition, but speed up cost recognition (Savitri, 2016 in (Chandra, 2020). Results of research conducted (Aristawati & Rasmini, 2018) And (Holiawati et al., 2022) shows the results of accounting conservatism affect the earnings response coefficient. However, these results are different (Ariesta & Muhammad, 2022) that partially accounting conservatism has no effect on the earnings response coefficient.
Another factor that influences the earnings response coefficient is earnings persistence. Earnings persistence reflects the quality of the company's earnings and shows the company's ability to maintain profits from time to time, not only during certain events (NB Siregar & Maksum, 2018). The higher the company's profit, the higher the earnings response coefficient (ERC) (Jumaidi & Rijal, 2018). Research result (Agustina et al., 2022) shows that the results of earnings persistence have a significant effect on the earnings response coefficient. However, the results of these studies are different (Jumaidi & Rijal, 2018) which states that earnings persistence does not affect the earnings response coefficient. Apart from the three factors above, there are other factors that influence the earnings response coefficient, namely audit quality. High quality, relevant and reliable audited financial reports result from audits conducted effectively by qualified auditors (Elvianiet al., 2022). High quality auditors can detect acts of profit manipulation, which means that the audited income statement presents quality earnings. The more qualified the auditor, the investors will assume that the financial reports produced are of higher quality and better (Eksandy & Milasari, 2020).
The results of research conducted by (Wahyudi & Kadir, 2019) And (Sholihahet al., 2019shows the results of audit quality have an effect onearnings response coefficient. However the research was done (Audrey & Setyarini, 2022) And (Kristanti & Almilia, 2019) The results show that audit quality has no effect onearnings response coefficient. Based on the research background, the purpose of conducting this research was to determine the effectdefault risk, accounting conservatism, earnings persistence and audit qualityearnings response coefficient (ERC) for non-financial companies listed on the Indonesian Stock Exchange (IDX) for 2019-2021.

LITERATURE REVIEW Theoretical basis Signal Theory
According to Suganda (2018: 15) signaling theory is a theory used to understand an action taken by management in conveying information to investors which can ultimately change investors' decisions in seeing the condition of the company. Symmetrical information is the ideal condition expected by investors (called the principal) when the company's management (agent) provides the information. Signaling theory is strongly related to the availability of information. Lack of information for outsiders will cause them to protect themselves by providing low value to the company. Companies can increase the value of the company by reducing information fraud (asymmetric information delivery). Giving signals to outsiders is one way to reduce information asymmetry. Information published as an announcement will provide a signal for investors in making decisions. The signal can be a positive signal (goodnews) or a negative signal (badnews). (Fauzan & Purwanto, 2017). If the signal given by the company is good news for investors, it will make the ERC value high, and if the signal given is bad news for investors, it will make the ERC value low.

Earnings Response Coefficient(ERC)
According toScotts (2015)defines ERC is the coefficient used to measure the magnitude of stock returns in response to earnings announced by the company. According toHardiana (2022)Earnings Response Coefficient is a reaction to the announcement of a company's earnings which shows the quality of the earnings disclosed. The high or low ERC is determined mainly by the comprehension obtained from the information contained in the company's profits. Kartadjumena (2010) states that a strong market reaction to earnings information will be reflected in the high earnings response coefficient, conversely, a weak market reaction to earnings information will be reflected in the low earnings response coefficient (ERC). (Nasibah, 2019).

Default Risk
Default riskis the company's failure to pay interest or principal on a loan in a timely manner (Fersela et al., 2021). Default risk is a risk that is specific to each company that has the possibility to affect profits and stock returns of the company (Nuriyanto et al., 2020). Default risk is something that investors pay close attention to.

Accounting Conservatism
According toIrrawati et al., (2022:44)The principle of conservatism is a concept that recognizes expenses and liabilities as soon as possible even though there is uncertainty about the results, but only recognizes income and assets when it is certain that they will be received. Conservatism is a management action by anticipating no profits more quickly and recognizing losses more quickly. The practice of accounting conservatism can slow down revenue recognition but speed up cost recognition (Chandra, 2020).

Profit Persistence
Profit persistence is the company's ability to maintain its profits so that they remain stable from year to year and also to be able to predict profits in the coming year (Maulana & Triana, 2021). Earnings persistence is the current earnings capability which is expected to be able to explain future earnings reflecting the quality of the company's earnings indicating that the company can maintain its earnings from time to time. (Adam et al., 2019).

Audit Quality
According toPurba & Umar, (2021)Audit quality is the auditor's ability to detect errors in financial statements and report them to users of financial statements that adjust the audit to auditing standards. According toSholihah et al., (2019)Audit quality is an image or good name that is obtained for a job well done by its clients in their responsibilities as an auditor. Audit quality is important to ensure the reliability of the company's financial statements and the continuity of the company.

Influence Between Variables Effect of Default Risk on Earnings Response Coefficient
If in a market there are companies with information on high debt levels in the future, it is likely that these companies will not receive a good response from investors so that the value of the Earnings Response Coefficient will weaken. So it can be said that the higher the Default risk of a company, the

EFFECT OF DEFAULT RISK, ACCOUNTING CONSERVATISM, PROFIT PERSISTENCE AND AUDIT QUALITY ON EARNINGS RESPONSE COEFFICIENT (ERC) IN NON-FINANCIAL COMPANIES REGISTERED ON THE INDONESIAN STOCK EXCHANGE (IDX) IN 2019-2021
Muammar Khaddaf, Nasriani, Yunina, Mursidah, Damsar (Ferellaet al., 2021).If the default risk of a company is getting bigger, it will affect the response of investors and will reduce the ERC (Santioso et al , 2020). Based on the description above, the research hypothesis is proposed as follows: H1: Default risk affects the earnings response coefficient.

Effect of Accounting Conservatism on Earnings Response Coefficient
Conservative accounting principles reflect the minimum profit a company can obtain so that profits prepared using a conservative method are not exaggerated profits, so they can be considered quality profits. (Goddess, 2004) in (Marlina & Anna, 2018). Usually companies are very careful when presenting the value of company assets and profits. Companies that practice accounting conservatism as an effort to give a signal to investors that the precautionary measures that have been taken are that the information presented is relevant and reliable. This signal is then expected to be received by investors and then projected into changes in stock prices or commonly called stock abnormal returns (Holiawati et al., 2022). According toAristawati & Rasmini, (2018) in his research stated that accounting conservatism has a positive effect on the earnings response coefficient. This means that the higher the accounting conservatism in the company, the earnings response coefficient will increase.
Based on the description above, the research hypothesis is proposed as follows: H2: Accounting conservatism affects the earnings response coefficient.

Effect of Profit Persistence on Earnings Response Coefficient
The higher the earnings response coefficient will go in the same direction as the higher the firm's profit persistence which indicates quality earnings (Ahabba & Sebrina, 2020).So that the more persistent changes in earnings from time to time, the higher the Earnings Response Coefficient (ERC) value. This explains that the profit earned by the company can continue to increase in the future. The high market response to company profits can be reflected in the high Earnings Response Coefficient (ERC) value, where the higher the Earnings Response Coefficient (ERC) value of a company, the higher the quality of the profits generated by the company. (Chandra, 2020).
Based on the description above, the research hypothesis is proposed as follows: H3: Earnings persistence affects the earnings response coefficient.

Effect of Audit Quality onEarnings Response Coefficient
To obtain good quality earnings information, it is necessary to have good audit quality as well. So if the company has good audit quality it will encourage investors to give a good response as well, thus making a high ERC value (Audrey & Setyarini 2022). According to research (Wahyudi & Kadir, 2019) shows that the quality of the auditor has an influence on the earnings response coefficient which indicates that the quality of the auditor is able to influence the earnings response coefficient. A qualified auditor will certainly carry out quality checks, including reported earnings (Elviani et al., 2022).
Based on the description above, the research hypothesis is proposed as follows: H4: Audit quality has an effect on the earnings response coefficient.

METHOD OF IMPLEMENTATION
The object of this research is default risk, accounting conservatism, earnings persistence and audit quality on the earnings response coefficient.The research location in this study is a non-financial company listed on the Indonesia Stock Exchange (IDX) in 2019-2021.The population in this study are all non-financial companies listed on the Indonesia Stock Exchange (IDX) for 2019-2021 consisting of 673 companies. The sampling technique uses purposive sampling, namely the sampling method based on certain criteria.
The criteria taken in this study are as follows: 1. Non-financial company listed on the Indonesia Stock Exchange (IDX) from 2019-2021. 2. Non-financial companies that can be accessed during the observation period. 3. Non-financial companies that earn profits consecutively during the observation period. In this study there are 53 companies that are included in the outliers. Outliers are data that has unique characteristics that look very different from other observational data that appear at extreme values. In this study, extreme and too broad forms of data or values were eliminated from the research sample. This is because the existence of data that has extreme data can interfere with the data regression process so it must be avoided.
The type of data in this study is quantitative data in the form of secondary data which includes the annual financial reports of non-financial companies listed on the Indonesia Stock Exchange (IDX) for 2019-2021 which can be accessed via the websitewww.idx.co.idand market data in the form of stock prices, company returns and market returns obtained from the sitehttp://finance.yahoo.com. The data analysis method in this study is panel data regression analysis which is an analysis used to measure how much influence the independent variables have on the dependent variable. The regression equation as follows: : Return of the market index in the t-period 2) Calculating Abnormal Return obtained from finding daily stock returns and daily market returns, Daily stock returns can be calculated by:

Default Risk
Default riskis the company's failure to pay interest or principal on a loan in a timely manner (Fersela et al., 2021). The Debt To Equity Ratio (DER) is also a leverage ratio that can measure a company's default risk variable to determine the company's financial health by comparing the amount of the company's total debt with the company's total equity. Default risk is formulated as follows (Fersela et al., 2021):

Accounting Conservatism
Conservatism is a management action by anticipating no profits more quickly and recognizing losses more quickly. The practice of accounting conservatism can slow down revenue recognition but speed up cost recognition (Chandra, 2020). Conservatism is calculated based on the Givoly & Hayn (2000) model, measured on an accrual basis, namely the difference between the company's profit and cash flow from the company's operating activities and then divided by the company's total assets, then multiplied by minus one (-1) with the following formula(Chandra, 2020):

Profit Persistence
Earnings persistence is the current earnings capability which is expected to be able to explain future earnings reflecting the quality of the company's earnings indicating that the company can maintain its earnings from time to time. (Adam et al., 2019).Profit persistence is measured by using the ratio of changes in current income, namely profit before tax this year minus profit before tax for the previous year divided by total assets, formulated as follows (Adam et al., 2019):

Audit Quality
According toSholihah et al., (2019)Audit quality is an image or good name that is obtained for a job well done by its clients in their responsibilities as an auditor. Audit quality is important to ensure the reliability of the company's financial statements and the continuity of the company.Audit quality is proxied by using the size of a public accounting firm or KAP. KAP size uses a dummy variable measurement with a nominal scale measured by the formula (Sholihah et al., 2019): KA: Score 1 for companies that use Big Four or affiliated KAP audits, and score 0 for companies that use Non Big Four KAP audits.

RESULTS AND DISCUSSION Descriptive Statistical Analysis
The results of the descriptive statistical test for the research variables can be seen in table 2 below:

Table 2 Descriptive Statistical Analysis
Source: Eviews Output 12, 2023 Based on table 2 above, the results of the dependent variable's descriptive statistics, namely the response coefficient (ERC), show the lowest (minimum) value of -1.632032. The highest value (maximum) is 1.926898. And the average value (mean) is 0.029797 and a standard deviation of 0.400903. Descriptive statistics for the independent variable default risk show a minimum value of 0.001969, a maximum value of 1.989027, an average value of 0.646594 and a standard deviation of 0.461134. Thus, the average DER ratio is < 1 which indicates that the company's default risk is low. Descriptive statistics for the independent variable accounting conservatism show a minimum value of -0.482121, a maximum value of 0.245330 and a standard deviation value of 0.095682. By obtaining an average value of accounting conservatism -0. 015185 then the principles of conservatism mean the sample company is low. The descriptive statistics of the earnings persistence variable show a minimum value of -0.535222, a maximum value of 0.590219 and an average of 0.008009 and a standard deviation value of 0.087932. The average value of 0.008009 > 0 indicates that the company is persistent.

Panel Data Regression Analysis Panel Data Regression Model Determination: 1. Chow test Table 3 Chow Test Results
Based on table 3 above it can be seen that the valueProbability Cross-Section Chi-Squareof 0.0003. These results indicate that the value of the Probability Cross-Section Chi-Square is less than 0.05 (0.0003 <0.05) so that the selected model is the Fixed Effect Model.

EFFECT OF DEFAULT RISK, ACCOUNTING CONSERVATISM, PROFIT PERSISTENCE AND AUDIT QUALITY ON EARNINGS RESPONSE COEFFICIENT (ERC) IN NON-FINANCIAL COMPANIES REGISTERED ON THE INDONESIAN STOCK EXCHANGE (IDX) IN 2019-2021
Muammar Khaddaf, Nasriani, Yunina, Mursidah, Damsar   Source: EViews output 12.2023 Table 6 above shows that the correlation value between the independent variables (default risk, accounting conservatism, earnings persistence and audit quality) is less than 0.80. Thus, it can be concluded that there is no multicollinearity problem between the independent variables. Based on the Glejser test results in table 7, it is known that the probability value of the default risk variable is 0.8327 > 0.05. The probability value of accounting conservatism is 0.9054 > 0.05. The probability value of profit persistence is 0.2718 > 0.05 and the probability value of audit quality is 0.6600 > 0.05. So it can be concluded that the data does not occur heteroscedasticity.

Hypothesis test t test (Partial Test) Table 8 T test results
Based on table 9 above, the results of the t test can be concluded as follows: 1. The t-count value of the default risk variable is 0.078991 and the t-table value is 1.649 which indicates that 0.078991 < 1.967 and a significance level of 0.9371 so that it can be concluded that default risk has no significant effect on the earnings response coefficient (ERC), so that H1 is rejected. 2. The t-count value of the accounting conservatism variable is 1.172138 and the t-table value is 1.649 which indicates that 1.172138 <1.967 and a significance level of 0.2423 so that it can be concluded that accounting conservatism has a not significant positive effect on the earnings response coefficient (ERC). so that H2 is rejected. 3. The t-count value of the earnings persistence variable is 0.538139 and the t-table value is 1.649 which indicates that 0.538139 <1.967 and a significance level of 0.5910 so that it can be concluded that earnings persistence has a not significant positive effect on the earnings response coefficient (ERC). so that H3 is rejected. 4. The t-count value of the audit quality variable is -4.568862 and the t-table value is -1.649 which indicates that -4.568862 < -1.967 and a significance level of 0.0000 so that it can be concluded that audit quality has a negative and significant effect on the earnings response coefficient (ERC), so that H4 is accepted.

Effect of Default Risk on Earnings Response Coefficient
Based on statistical results, the coefficient value of the default risk variable is positive, which is equal to 0.011854 which indicates a unidirectional relationship. This is possible for companies with high debt levels to indicate that companies can use their assets at a rate of return that is higher than their debt so that companies can increase profits. However, this is contrary to the theory that default risk should have a negative relationship where if default risk increases, it will make the value of the earnings response coefficient decrease, so it can be concluded that the higher the company's DER is not followed by a decrease in the earnings response coefficient. And a significance value of 0.9371 > 0.05 so that H1 is rejected. The results of the study show that the company's default risk is not a factor that is considered important by investors in making investment decisions. High or low default risk owned by the company is not able to influence the earnings response coefficient. This is because default risk information is only addressed to creditors and is the responsibility of management, so that good news on profits generated by the company will be used to pay debts to creditors rather than investors. So that investors judge that the profit reported by the company cannot describe the profit that will be obtained in the future. Therefore, investors prefer not to respond to the company's default risk level related to earnings information.
The results of this study are in line with the research conducted (Santioso et al., 2020)And (Fersela et al., 2021)which shows the default risk results do not affect the earnings response coefficient. As well as research conducted (Tania, 2018)also shows that default risk has no effect on the earnings response coefficient. Companies with a high level of risk are certainly avoided by the market, even though the default risk as measured by DER shows low results, but it turns out that this also does not affect the earnings response coefficient.

Effect of Accounting Conservatism on Earnings Response Coefficient
Based on statistical results, the coefficient value of the accounting conservatism variable is positive, which is equal to 0.337868 which indicates a unidirectional relationship between accounting conservatism and earnings response coefficient, where if conservatism increases, earnings response coefficient also increases and if conservatism decreases, earnings response coefficient also increases. decrease. However, the significance value shows 0.2423 where the value is greater than 0.05 and H2 is rejected, so it is concluded that accounting conservatism has a not significant positive effect on the earnings response coefficient (ERC). The results of the study show that the principle of corporate accounting conservatism is not the main factor influencing investors' decision making. Although accounting conservatism has a positive but not significant relationship. This is because investors do not understand how conservative accounting principles are, so they decide to buy shares of a company based on other factors. It should be noted that accounting conservatism is an action taken by management using the principle of slowing down revenue recognition, accelerating cost recognition, increasing debt valuation and lowering asset valuation. (Chandra, 2020). So that investors do not really know whether or not the principle of accounting conservatism exists in the company. This is in line with research conducted by(Aritonang & Ariefianto, 2022)which states that the use of accounting conservatism principles has not been able to influence investors' decisions because investors do not see accounting conservatism as an investment appraisal and investors prefer companies that provide information on actual financial conditions. As well as research conducted (Irwan & Cahyaningsih, 2020)which states that accounting conservatism has no effect on the earnings response coefficient (ERC).

Effect of Earnings Persistence on Earnings Response Coefficient
Based on the statistical results, the coefficient value of the earnings persistence variable is positive, which is equal to 0.138708 which indicates a unidirectional relationship between earnings persistence and earnings response coefficient where if earnings persistence increases, the earnings response coefficient also increases and if earnings persistence decreases, the earnings response coefficient also decreased. However, a significance value of 0.5910 where the value is greater than 0.05 and H3 is rejected, so it is concluded that earnings persistence has a not significant positive effect on the earnings response coefficient (ERC). These results indicate that earnings persistence is not a factor in determining market response. Earnings persistence reflects the quality of the company's earnings which shows that the company is able to maintain its profits from time to time(NB Siregar & Maksum, 2018). Although earnings persistence has a positive but not significant relationship. This is because there is a transitory component in earnings which causes earnings to be less relevant for measuring the earnings response coefficient. The transitory component is a component that only affects profit in the year concerned, but does not affect the future. Suppose there is an increase in profits caused by the sale of fixed assets or the termination of a business activity. For investors there is no reason to expect profits like this to be repeated in the future. So it is not responded by investors.
This also shows that changes in profits that occur in the company are considered normal by investors. Because most investors see current or present profits compared to future profits, even though the company has shown positive (persistent) earnings persistence for the future. This is in line with research conducted by (Jumaidi & Rijal, 2018)And (Utami & Yudowati., 2021)which states that earnings persistence does not affect the earnings response coefficient (ERC).

Effect of Audit Quality on Earnings Response Coefficient
Based on the statistical results, the coefficient value of the audit quality variable is negative, namely -2.156159 which indicates that if audit quality increases, the earnings response coefficient will decrease and if audit quality decreases, the earnings response coefficient will increase. And a significance value of 0.0000 where the value is smaller than 0.05 and H4 is accepted, that audit quality has a negative and significant effect on the earnings response coefficient (ERC). These results indicate that audit quality is able to influence the earnings response coefficient (ERC). In this study, audit quality provides a value that can reduce or reduce the earnings response coefficient. This decrease occurred because companies that were audited by the big four KAPs would continuously receive negative responses from investors. Investors will assume that companies that use KAP big four will incur a larger burden so that they can reduce the profit allocation owned by the company. A decrease in the allocation of company profits will certainly have an impact on the results that will be received by investors, so that the dividends that will be distributed will be reduced and result in a decrease in the earnings response coefficient (ERC).
The results of this study are in line with research conducted by (Wahyudi & Kadir, 2019)which states that audit quality has a negative and significant effect on earnings response coefficient (ERC) and research (Sholihahet al., 2019)with the results of audit quality affecting the earnings response coefficient (ERC).

CONCLUSIONS AND SUGGESTIONS
Based on testing of the research results that have been carried out above regarding the effect of default risk, accounting conservatism, earnings persistence and audit quality on earnings response coefficient (ERC) in non-financial companies listed on the Indonesia Stock Exchange (IDX) in 2019-2021, it is concluded that default risk does not have a significant effect on the earnings response coefficient (ERC), accounting conservatism and earnings persistence have a not significant positive effect on the earnings response coefficient (ERC) and audit quality has a negative and significant effect on the earnings response coefficient (ERC). It is recommended for further research to develop other variables that are considered to influence the earnings response coefficient such as Corporate Governance, Intellectual Capital, Substainability Reporting, Profit Growth, Capital Intensity or other variables that can affect ERC. Because the independent variables in this study were only able to influence the dependent variable by 8%. And can add a longer observation period.