Investigate the Relationship between Financial Development and Cost of Equity

The present research with goal of survey the relationship between financial development and cost of equity in companies accepted in Tehran Stock exchange has been done. For this purpose, financial information of 118 companies that were selected through a systematic removal procedure during the period 2010 to 2015 was investigated. To measuring of financial development, stock market and banking development and for cost of equity Gordon Growth model has been used. In order to analyze the data and test the hypotheses, multivariate regression models with panel data were used. The results of the research indicate that there is a negative and significant relationship between development of the stock market and development of banking with cost of equity.