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.
Akhgar, M.O. and Zaheddoost, H. (2020). Cost of Capital, CEO Turnover and Investment Opportunities. Empirical Studies in Financial Accounting Quarterly, 17(67), pp. 125-152. In Persian. https://qjma.atu.ac.ir/issue_1843_2182.html?lang=en
Asadi Nahari, N., Talebnia, G., Vakilifard, H.R. and Royayee, R.(2019), The moderating role of adopting International Financial Reporting Standards (IFRS) on the relationship between Earning Quality With equity costs (Empirical Evidence: Banks and Insurance firms and Investments firms in Tehran Stock Exchange. Journal of Accounting Knowledge and Management Auditing, 8(30), pp. 15-45. https://jmaak.srbiau.ac.ir/article_14287.html?lang=en
Choi, J.H., and Lee, W.J. (2014). Association between Big 4 auditor choice and cost of equity capital for multiple-segment firms. Accounting and Finance, 54 (1), pp. 135–163. https://doi.org/10.1111/acfi.12011
Derakhshan Mehr, A., and Karami, S. (2019). The Effect of CEO Tenure and Audit Firm Size on the Quality of Accounting Information. Journal of Accounting and Management Vision, 2(6), pp. 17-30. In Persian. http://www.jamv.ir/issue_11181_11182.html?lang=en
Hajiha Z. and Azadzadeh, A. (2018). Non-cash and Non-operating related party transactions and Comparability of Financial Statements with the Moderating Role of Audit Firm Size. Journal of Financial Accounting Knowledge, 5(1), pp. 53-78. https://www.sid.ir/en/journal/ViewPaper.aspx?ID=762663
Hasas Yeganeh, Y., Mohamadi., M. and Salemi, M.J. (2015), ). The Relationship between Audit Quality Characteristics and Equity Costs (Based on Employer Size), Journal of Securities Exchange, 31, pp. 113-140.In Persian
Kohzadi Tahne, A., (2020). Audit Materiality: The Expectation Gap Between Auditor's and Users of Audit Reports, Journal of Accounting and Management Vision, 3(24), pp. 57-80. http://www.jamv.ir/article_107611.html?lang=en
Mohammad Rezaei F., and Yaghoob Nezhad, A. (2017). Audit Firm Size and Audit Quality: Theoretical and Methodological Issues and Suggestions. The Financial Accounting and Auditing Researches, 9(34), pp. 31-59. https://www.sid.ir/en/journal/ViewPaper.aspx?id=551570
Qana, A. (2017). Study Relationship Between Auditor Independence and Cost of Equity the Companies Listed on the Tehran Stock Exchange. International Conference on Social and Educational Science, Humanities and Psychology. https://www.sid.ir/en/Seminar/ViewPaper.aspx?ID=45930
Saadatmand, R. and Alavi, M. (2019). Audit Committee Characteristics and Cost of Equity Capital. Journal of empirical research in accounting, 8(31), pp. 233-252. https://www.sid.ir/en/journal/ViewPaper.aspx?ID=662899
Safari Gerayli M., and Valiyan H. (2018). Designing a Model and Assessing the Capabilities of Audit Institutions in Promoting Social Trust. Iranian Journal of Behavioral & Valued Accounting, 3(6), pp. 65-104. https://www.sid.ir/en/Journal/ViewPaper.aspx?ID=762931
Salehi, M., Beyrami, L., Hoshyar, R. and Beyrami. V. (2016). Factors Affecting the Cost of Capital with Emphasis on Audit Quality in Companies Listed on the Tehran Stock Exchange. Quarterly Journal of Fiscal and Economic Policies, 4(15), pp. 135-185.In Persian. https://qjfep.ir/article-1-265-fa.html
Salimi, A., gorjizadeh, D. and safarpoor, M. (2020). Political Risk and Equity Costs with Emphasis on the Moderating Role of Political Relations. Journal of Accounting and Management Vision, 3(36), pp. 87-98. In Persian. http://www.jamv.ir/article_128638_bdeb72b3d4b0a929e4629cd25594d957.pdf?lang=en
Tevdello and Vanstralen, (2008). Earning Management and Audit Quality in Europe: from the private client segment. European Accounting Review. 17(3), pp. 447-469. https://doi.org/1080/09638180802016684
Tuovila, A. (2020). Audit, The Investopedia express podcast.
Okere, W., Ogundipe, U.L., Lawal, Q.O., Eluyela, F.D. and Ogundipe, K.E. (2018). Auditors’ Choice and Financing Decision of Selected Quoted Firms in Nigeria, International Journal of Management, Accounting and Economics 5(2), pp. 66-77. https://www.ijmae.com/article_114725_3e8cd74682a83a4a3edaa393dd05f7b2.pdf
Zhou, M. (2019). The Effect of Key Audit Matters on Firms' Capital Cost: Evidence from Chinese Market (October 16, 2019). Available at SSRN: https://ssrn.com/abstract=3470587 or http://dx.doi.org/10.2139/ssrn.3470587.
Azimi Ashtiani, N. (2021). Evaluation of the Relationship between Audit Firm Choice and Cost of Equity. Iranian Journal of Accounting, Auditing and Finance, 5(2), 25-33. doi: 10.22067/ijaaf.2021.40231
MLA
Narges Azimi Ashtiani. "Evaluation of the Relationship between Audit Firm Choice and Cost of Equity", Iranian Journal of Accounting, Auditing and Finance, 5, 2, 2021, 25-33. doi: 10.22067/ijaaf.2021.40231
HARVARD
Azimi Ashtiani, N. (2021). 'Evaluation of the Relationship between Audit Firm Choice and Cost of Equity', Iranian Journal of Accounting, Auditing and Finance, 5(2), pp. 25-33. doi: 10.22067/ijaaf.2021.40231
VANCOUVER
Azimi Ashtiani, N. Evaluation of the Relationship between Audit Firm Choice and Cost of Equity. Iranian Journal of Accounting, Auditing and Finance, 2021; 5(2): 25-33. doi: 10.22067/ijaaf.2021.40231
Send comment about this article