Investigation the effect of corporate governance on the financing cost

Abstract

Financing companies’ quality of corporate governance is one of the important factors to financing, because it can has an effect on payment risk or an un-payment, hence, we can state that the quality of corporate governance will influence on financing cost. Corporate governance causes to reduce the financing crisis risk. This problem is very important, when this risk leads to create more expenses. So, corporate governance causes to reduce the investing costs, and in conclusion increases the value of company. Naturally, the quality of corporate governance leads to create trust and reliance in investors and reduces their informational risk and surely will influence on companies financing cost. The main purpose of this study is to investigate the effect of corporate governance, shareholders control, independence of directorate on the financing cost of listed companies in Tehran Stock Exchange during 5 years (since 2006 to 2013).The population is 448 companies that 221 companies had been selected with Chochran method. The result of this research indicates that corporate governance has not significantly effect on the companies financing cost.