Comparative Analyzing between Earnings Transparency and Cost of Equity Capital

چکیده مقاله

This research focused on comparative analyzing the earnings transparency and cost of equity capital. Cost of equity capital is measured based on the model proposed by Easton (2004) and earnings transparency is measured using the model presented by Barth et al (2013). The research sample includes 255 firms listed in Tehran Stock Exchange over 5 years period. Evidences showed that the mean values of cost of equity capital are significantly different between those firms with low and high degree of earnings transparency; Cost of equity capital is more (less) in firms with low (high) earnings transparency. Also, the mean values of earnings transparency are significantly different between those firms with low and high cost of equity capital; Earnings transparency is more (less) in firms with low (high) cost of equity capital. As a whole, cost of equity capital is a function of earnings transparency inversely.

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