The effect of political relations on the conservatism of profit and loss and the cost of debt of companies accepted in the Tehran Stock Exchange

In economic systems based on relationships, political communication is one of the most important sources of value for companies with these relationships. One of the solutions for the government to control the country's economy is to influence the enterprises. Government influence in economic units is created through the relations of politicians or state ownership. Establishing and maintaining relationships between companies and government is usually accompanied by competitive advantages, companies with more political relationships are more likely to access capital resources and other benefits through their communications, which rely heavily on high-quality financial reporting. The goal of some corporate executives to communicate is to eliminate financial constraints with the least cost. The purpose of this study was to identify the effect of the political relations of Tehran Stock Exchange companies on the conservatism of profit and loss and the cost of debt. The method of this research is correlation and based on multivariate regression. To test the hypotheses, a sample of 102 companies was used during the five-year period from 2013 to 2017. The findings of the research show that the political relations in companies have a negative and significant effect on the conservatism of profit and loss. Political relationships also have a negative and significant impact on corporate debt costs.