Document Type : Original Article
Ma in accounting/Department of Accounting/Islamic Azad University/shahroud branch/shahroud/Iran
The cost of equity capital plays a key role in financing and investment decisions. The cost of equity capital is defined conceptually to expected returns. In other words, the is the expected minimum rate of return. Suppose the expected return is less than the cost of equity capital. In that case, the entity's value will decrease, so management must try to maintain the entity's value to bring the expected return to at least the cost of equity capital; the key to success is to reduce the cost of equity capital. The present study aimed to determine the effect of audit firm choice on the variable cost of equity capital. Therefore, the paradigm or philosophical presupposition was positivist and meta-positivist. The statistical population included 99 companies listed on the Tehran Stock Exchange from 2009 to 2019. In addition, data analysis was performed using the R software package. According to the results, the auditor choice variable from the audit firm and the total debt to equity ratio significantly affected the cost of equity capital. Moreover, the variable of lack of auditor change had a significant impact on companies’ cost of equity capital. Other variables of the two models were insignificant and did not affect the cost of equity capital.