The impact of business strategy on the cost of equity, considering the moderating role of information system quality
Subject Areas : business management
Arefe Amani hafshejani
1
,
Maryam Emamimibody
2
*
1 - Master's student, Accounting Department, Shahinshahr Branch, Islamic Azad University, Shahinshahr, Iran
2 - Assistant Professor, Accounting Department, Shahin shahr Branch, Islamic Azad University, Shahin shahr, Iran
Keywords: Business Strategy, Cost of Equity, Information System Quality, Information transparency, investment risk.,
Abstract :
In today's increasingly complex and turbulent business environment, organizations face a myriad of challenges that have the potential to determine their success or failure. These challenges, fueled by continuous economic fluctuations, technological advancements, and growing market competition, demand heightened awareness, adaptability, and strategic foresight. One of the most pressing concerns for businesses is securing financial resources at the lowest possible cost, allowing them to maintain competitiveness in an increasingly crowded marketplace. In this context, the cost of equity, as a critical component of overall capital costs, plays a crucial role in shaping financial decisions, investment strategies, and long-term growth plans. This cost directly influences the profitability, risk profile, and financial stability of companies. Consequently, the primary objective of this study is to investigate the relationship between business strategy and the cost of equity, while also considering the influence of information system quality within companies listed on the Tehran Stock Exchange. To test the research hypotheses, a systematic sampling method was employed, utilizing financial data from 142 companies listed on the Tehran Stock Exchange over the period from 2017 to 2023. The study's research model was estimated using panel data analysis and fixed effects. The results of this research reveal that both business strategy and the quality of information systems exert a significant negative impact on the cost of equity. This finding suggests that companies can effectively reduce their financial costs by enhancing the quality of their information systems, thereby fostering sustainable growth. Furthermore, high-quality information systems strengthen this negative effect by minimizing information risks and improving crucial indicators such as investment intensity and marketing capabilities. These findings underscore the critical role that advanced information systems play in shaping sound financial decisions and in formulating effective long-term growth strategies.
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