Studying the impact of profit sustainability on the relationship between the readability of financial reporting and the cost of equity

The cost of equity is one of the basic concepts in the field of financial literature that plays a fundamental role in financing and investment decisions. In order to determine the appropriate financial resources, the management of the company should give importance to the cost of equity. The purpose of this study is the effect of profit stability on the relationship between the readability of financial reporting and the cost of equity. The statistical research population of companies admitted to the Tehran Stock Exchange and the studied sample includes 140 admitted companies during the years 2017 to 2018. The research method is descriptive and in terms of the relationship between the variables, it is causal-correlation, and in terms of the objective, it is applied and in terms of the event, it is post-event. The regression method and panel data as well as the fixed effects model were used to process and test the hypotheses. The results of the analysis of research hypotheses showed that the readability of financial reporting has a negative and significant relationship with the cost of equity, and the stability of profit has a positive and significant effect on the relationship between the readability of financial reporting and the cost of equity.