The Effect of Management Earning Forecast‘s Error on Cost of Equity Capital of Companies Listed in Tehran Stock Exchange

Predicting profit of each stock is one of the key factors in investment and in compatibly of stock methods it is highly important both for providing capital and for users who use it for decision- making. Measuring future profit in each stock, managers seek to have the trust of the users who consider profit as a tool for assessing. Following empirical research is for assessing effect of management profit prediction error on capital cost in companies accepted in stock exchange of Tehran. Statistical society of the research includes 73 companies which are active in stock exchange of Tehran for a-five-year period from 2007-2010. Multi-variable regression method was used for investigation. The results gained out of the research indicates a direct and meaningful relation between profit prediction error and capital cost.