%0 Journal Article
%T Investigating the Effect of Financial and Economic Development on Cost Of ‎Equity Capital
%A Mohammad VAHDANI¹*
%A Zahra FARHADI¹
%A Javad MOHAMMADI MEHR²
%J Journal of Organizational Behavior Research
%@ 2528-9705
%D 2019
%V 4
%N 2
%P 61-76
%X One of the most important components of any economic activity is the provision of financial resources. ‎The required financial resources can be provided from equity or debt. The basic question is “which of these ‎resources should be used over the lifetime of an economic firm?” In the financing, the composition of debt ‎and equity represents the structure of capital. The policy of capital structure creates a balance between risk ‎and returns. Using more debt will increase the risk of the company's profitability while, lead to higher ‎expected returns. The risk of using more debt reduces stock prices, while, its expected higher returns will ‎increase stock prices. The purpose of the present study was investigating the effect of financial development ‎on cost of equity capital in firms listed on the Tehran Stock Exchange. The statistical population consisted of ‎all firms listed on the TSE, and the statistical sample was chosen by applying the Systematic Removal Method ‎including 127 firms over the period from 2009 to 2016. Therefore, theoretical foundations were collected, and ‎the research hypotheses were compiled, after that the necessary information from the set of studied ‎companies was gathered and prepared. In order to examine the hypotheses, the correlation coefficient and ‎multiple regression were used. Research findings indicated that stock market development and banking ‎development had a positive and significant effect on the cost of equity capital. Also, the coefficients and the ‎significance level of the t-statistic of the control variables indicated that the beta, firm size and profitability of ‎the firm were effective on the cost of equity‎‎‎‎.
%U https://odad.org/article/investigating-the-effect-of-financial-and-economic-development-on-cost-of-equity-capital