Journal of Financial Accounting Research Vol. 10, No.2, Ser No. (36) 2018The Effect of Disclosure Quality in Terms of Reliability and Timeliness on the Stock Trading Cost

Stock trading cost is one of the negative consequences of having a capital market microstructure which it affects the performance of financial markets and the assessment of stock liquidity significantly. If the company's inside information does not disclose reliably andin a timely manner,imposes losses on investors.The present study seeks to examine the effect of disclosure quality in terms of reliability and timeliness on the stock trading cost. Target sample consists of 97 companies listed in Tehran Stock Exchange during 2007-2016. The multivariate regression model with a data panel and the fixed effect approach were used to verify the research hypothesis. The results showed that both the reliability and the timeliness of disclosure reduce the stock trading cost. These results suggest that the honest and timely disclosure of companies' information reduces information asymmetry, and as a result, investors experience lower trading costs.