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The Effect of Management Earning Forecast‘s Error on Cost of Equity Capital of Companies Listed in Tehran Stock Exchange

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  • Roghaye Entezarian
  • Ali Zabihi
  • Khosro Faghani Makrani

Abstract

Predicting profit of each stock is one of the key factors in investment and in compatibly of stock methods it is highly important both for providing capital and for users who use it for decision- making. Measuring future profit in each stock, managers seek to have the trust of the users who consider profit as a tool for assessing. Following empirical research is for assessing effect of management profit prediction error on capital cost in companies accepted in stock exchange of Tehran. Statistical society of the research includes 73 companies which are active in stock exchange of Tehran for a-five-year period from 2007-2010. Multi-variable regression method was used for investigation. The results gained out of the research indicates a direct and meaningful relation between profit prediction error and capital cost.

Suggested Citation

  • Roghaye Entezarian & Ali Zabihi & Khosro Faghani Makrani, 2014. "The Effect of Management Earning Forecast‘s Error on Cost of Equity Capital of Companies Listed in Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 362-368, April.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:2:p:362-368
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    References listed on IDEAS

    as
    1. Rogers, Jonathan L. & Skinner, Douglas J. & Van Buskirk, Andrew, 2009. "Earnings guidance and market uncertainty," Journal of Accounting and Economics, Elsevier, vol. 48(1), pages 90-109, October.
    2. Jennifer Francis & Dhananjay Nanda & Per Olsson, 2008. "Voluntary Disclosure, Earnings Quality, and Cost of Capital," Journal of Accounting Research, Wiley Blackwell, vol. 46(1), pages 53-99, March.
    3. Kim, Joung W. & Shi, Yaqi, 2011. "Voluntary disclosure and the cost of equity capital: Evidence from management earnings forecasts," Journal of Accounting and Public Policy, Elsevier, vol. 30(4), pages 348-366, July.
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