An Analysis of the Relationship between Information Asymmetry and Cost of Capital

Abstract

The purpose  of  the present  study is to examine the relationship between information asymmetry and cost of capital in firms listed in Tehran stock exchange .to measure information asymmetry , the difference measure  between ask price and was used .cost of capital  included cost of common stock and cost of debt .to  test the research hypotheses. Chow test was used to estimate appropriate models of testing the hypotheses on combined data. The results indicated that information asymmetry has a positive and meaningful correlation with the cost of common stock and cost of debt.