Farzin Rezaei - Assistant Prof. of Accounting, Islamic Azad University of Qazvin, Department of Management and Accounting, Qazvin, Iran.
Soraya Weysi hesar - MSc. of Accounting, Islamic Azad University of Qazvin, Department of Management and Accounting, Qazvin, Iran.
Sanaz Sotoudeh

This study investigates the effect of extensive political connections on the quality of corporate financial reporting and the cost of equity capital of Tehran Stock Exchange. Corporates with extensive political connections through multi-criteria decision making pattern TOPSIS and entropy weighting method was determined. Political criteria were including the market value of equity, book value of assets, income, number of employees; total sales for export and insurancepayments, the higher rank of corporates from a set of factors governments the extensive relationship with connections and the corporate political being. Hypotheses were tested based on a sample of 95 corporate over an eleven year period from 2001 till 2011 and multivariate regression models by using panel data format. The results show that the earnings reporting quality of corporates that have extensive political connections is higher than corporates that have limited relations with the government. In addition, the cost of equity stock corporate with extensive political relations with government is higher than the corporates with limited connections with governments. In addition, the relationship between reporting quality and cost benefits of common stock in the corporate that have extensive political relations with government is weaker than corporates that have a limited relationship with the government.

financial reporting Quality, the cost of ordinary share, political connections, multicriteria decision making