Disclosure, Conservatism and their Influence on Cost of Capital of the Companies Accepted by Tehran Stock Exchange (TSE)

摘要

This study attempts to examine the relevance of Disclosure, conservatism and their influence on cost of capital of the companies accepted by Tehran Stock Exchange (TSE) and Compare the relative information content of them. Dased on sampling, 113 firms from Tehran Stock Exchange (TSE) were selected and examined during 2003 to 2009. The results support the priority of accounting figures over dividend policy. The results show there is some significant relation between the conservatism rate and cost of capital. The relation between the conservatism and cost of capital is on the basis of the Spence (1973). By virtue of the theory the companies benefit from the conservative accounting policy as a quality sign. When the conservative accounting policy is chosen it indicates a positive qualitative sign. Higher quality indicates the information risk of a company decreases probably; when the information risk of a company decreases the cost of capital decreases, too. Also the results show a significant relation between the disclosure rate and cost of capital namely when the disclosure rate of a company is higher (better) the usual shares cost is lower.