The Investigation of Operating Leverage (OL) and Financial Leverage (FL) Being Effected of Cost of Capital in Tehran Stock Exchange

In this study the effects of financial leverage and operating leverage on cost of capital is studied. Statistical method used in this the study to test the hypotheses is correlation analysis، by calculating correlation coefficient of the variables under study، and testing the hypotheses. The results showed that in Tehran Stock Exchange relationship between capital costs and operating leverage and financial leverage varies from industry to industry. While the capital costs associated with operating leverage and financial leverage is positive in some industries، it is positive and significant in the others، and negative and significant in the remaining. Therefore، findings of the relationship between operating leverage and financial leverage with cost of capital among industries is inconclusive. Also، the finding of this study indicates that the relationship between cost of capital and capital structure (debt to equity) until reaching the optimal point، is a negative and linear. By increasing the amount of debt، cost of capital is reduced and after passing the optimal point (due to excessive use of debt and increasing the risk of bankruptcy)، the cost of equity capital with structure has a positive linear relationship. However، the correlation of each company is different.