An investigation on the effects of the profit quality structures on Iranian Co. capital cost

摘要

This paper evaluates the effect of profit quality structures on capital cost and the primary objective is to disclose the effect to investors. The research methodology is practical based on its goal and its research design is Expose-Facto. The study selects 36 Iranian firms as statistical sample over the period 2006-2010 from some Iranian firms and the study selects post performances from their financial reports. The statistical parameters, statistical plots, multiple-variables linear-regression and correlation analysis are implemented for data analysis. The results show that the estimated model could explain 22 percentages of variable changes. This means that there is a weak linear relationship between cost of capital and profit persistence, profit predictability and other variables. Based on the regression estimation we concluded that there was a direct relationship between earnings persistence and cost of capital and there was a reverse relationship between earnings predictability and cost of capital.