Examining effect of earnings transparency on expected cost of capital in Tehran Stock Exchange

The aim of this study is investigating how transparency of earnings can affect cost of capital of firms in Tehran stock exchange. For this purpose, historical information of 108 companies in period of 1386 to 1391 extracted and then analyzed with descriptive statistics and panel data analysis. The results show that a negative relationship exists between earnings transparency and cost of capital. In other words, increase of earnings transparency will leads to decrease of cost of capital. In addition, results of this study indicate that firm size and operational cash flows changes ratio have a negative and significance correlation with expected cost of capital. In the model used in this study variables such as debt ratio, firm value, growth opportunities, systematic risk, rate of growth of the firm, liquidity, ratio of earnings per share variation to price per share have been used and results show that a non-significant correlation exists between these variables and expected cost of capital.