The Effects of Conditional Conservatism on Portfolio Cost of Capital

Two main groups of creditors and investors providing financial resources of firm's .creditors Following the acquisition of loans and interest of creditors and shareholders will follow of their expected return from the profits of the company's activities and changes in stock prices. The managers of financial companies following the control cost of capital to reduce costs of financial sustainable expected profit for shareholders. Conditional conservatism imposes stronger verification requirements for the recognition of economic gains than economic losses, generating earnings that reflect bad news in a timelier fashion than good news Resulting in increased accuracy and reliability of information about the amount and distribution of future cash flow and increase the value of the company indirectly through improved control and reduced costs of legal claims is expected that consequently the cost capital is reduced. In this study the effect of conditional conservatism on the cost of capital using data from 100 companies listed in Tehran Stock Exchange during the period 1382 to 1389 has been studied. Research findings show that, there is a significant relation between conditional conservatism and measures of implied cost of capital.