Investigating the role of political costs on the cost of equity

Given that the cost of equity is a summary criterion of how investment decisions are made about resource allocation, the relationship between equity costs and the amount of political costs confirms how important these criteria are to investors when making economic decisions. The purpose of this study is the role of political costs on equity costs. For this purpose, a hypothesis is formulated which is the political costs of the independent variable and the cost of equity of the dependent variable, respectively. The statistical population of the research is the companies listed on the Tehran Stock Exchange and the study sample includes 140 companies listed during the years 1395 to 1399. The research method is descriptive and correlational in terms of relationship between variables and applied in terms of purpose and post-event in terms of event. Regression method and panel data as well as fixed effects model have been used to process and test the hypotheses. The results obtained from the analysis of the hypothesis showed that political costs have a positive and significant effect on the cost of equity.