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Abstract
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Article Information:
Disclosure, Conservatism and their Influence on Cost of Capital of the Companies Accepted by Tehran Stock Exchange (TSE)
R. Zare, Z. Heidari, M. Salehi and H. Jourkesh
Corresponding Author: R. Zare
Submitted: October 22, 2012
Accepted: December 20, 2012
Published: May 25, 2013 |
Abstract:
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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. Based 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.
Key words: Conservatism, cost of capital, disclosure, life cycle, , ,
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Cite this Reference:
R. Zare, Z. Heidari, M. Salehi and H. Jourkesh, . Disclosure, Conservatism and their Influence on Cost of Capital of the Companies Accepted by Tehran Stock Exchange (TSE). Research Journal of Applied Sciences, Engineering and Technology, (22): 5188-5193.
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ISSN (Online): 2040-7467
ISSN (Print): 2040-7459 |
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