Accrual Quality, Earning Persistence and the Cost of Equity Capital

Abstract

At this study affect of Accrual Quality and Earnings Persistence on cost of equity capital have been studied.The main purpose of this study is to investigate the relation between the cost of equity capital and two attributes of earnings: Accrual Quality and Persistence. On the other word this research to examine that are invastors in iran to adjust they expections attentive to earnings quality ? In this study firms in Tehran Stock Exchange from 1380 to 1386 have been studied. Because of research data nature, panel analysis method has been used for estimate regression. Result of study indicates that the earnings attributes affect cost of equity capital. With controlling for Size and Book-to-Market ratio, findings suggest that there is adverse relation between Cost of equity capital and two attributes of earnings: Accrual Quality and Persistence.

Keywords

• cost of equity capital
• accrual quality
• earning persisterce