Document Type : Research Paper

Authors

• Mohammad Arabmazar Yazdi
• Mohammad Talebian

Abstract

This paper examines the relation between the quality of financial reporting, information risk and cost of capital for a sample of firms listed in TSE's during 1380-1384.Using accruals quality as a proxy for financial reporting quality and   information risk; prior   research suggests that financial reporting quality affects information risk, and in tum, affects firm's  cost of capital. We find that firms with poor accruals quality have higher cost of capital relative to firms with high accruals quality. We also find that the effect of discretionary accruals quality on cost of capital (cost of debt and cost of equity) is greater than for non-discretionary accruals (innate accruals) quality.

Keywords

• financial reporting quality
• Information risk
• Cost of capital
• Discretionary accruals
• Non-discretionary accruals