The relationship between the cost of equity capital and social responsibility by examining the impact of the company, market risk and asset return on the Tehran Stock Exchange

Subject Areas : Financial engineering

Mohsen Hamidian ^{1 *} , Ali kianifar ² , Elnaz Sabzei ³ , Saeid Shahabadi ⁴

1 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran.
2 - Department of Finance, South Tehran Branch, Islamic Azad University, Tehran, Iran
3 - Department of Finance, South Tehran Branch, Islamic Azad University, Tehran, Iran
4 - Department of Finance, Yazd Branch, Islamic Azad University, Yazd, Iran

Received: 2024-12-01 Accepted : 2025-01-04 Published : 2025-03-21

Keywords: Social responsibility, cost of equity capital, company size, market risk, return on net assets.,

Abstract :

This research aims to analyze the relationship between the cost of equity capital and social responsibility of companies by controlling the effects of company size variables, market risk and net return on assets. The research is of an applied purpose and descriptive-correlational in nature, and the Rahvard Navin software and the official website of the Tehran Stock Exchange Organization were used to collect data. Sampling by exclusion method was done among 203 companies for 4 years (1399 to 1402) and 983 observations were analyzed and for data analysis, Limer's F test, Hausman test and regression model were used. The results show that there is a negative and significant relationship between the cost of equity capital and social responsibility. Also, the results show that company size and return on net assets have a negative effect on the cost of capital, while market risk has a positive and significant effect on the cost of equity capital. These findings advise company managers that paying attention to social responsibility can help reduce financing costs, and investors are also suggested to prioritize companies with strong CSR performance in their investments.

References:

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