earnings attributes and cost of equity

some of inherent limitations of accrual accounting make the actual earnings and accounting earnings different. so assessment of reported earnings quality has allocated extensive bulk of accounting studies to itself. the decrease information quality such as earnings quality increases information risk and also the investor’s risk. it’ll increase their expected return. since cost of equity is the same as common shareholders expected return for the investee company, it’s expected that earnings attributes affect cost of equity. in this study earnings attributes have divided into two groups: attributes based on accounting information (earnings persistence and earnings predictability) and attributes based on market information (earnings response coefficient, adjusted earnings response coefficient, earnings value relevance and earnings timeliness), then relationship between this six earnings attributes, by using the information of 56 listed companies in tehran stock exchange (tse) for the fiscal years 1995-2005 and cost of equity has been investigated. the results show there are significant relation between earnings persistence, earnings predictability, earnings response coefficient, adjusted earnings response coefficient and cost of equity. but there aren’t significant relation between earnings value relevance, earnings timeliness and cost of equity.