Abstract

Separation ownership from management, scandal of big firms ,critical financial, disorder of capital markets and ................ lead to disappear Investors’ confidence and cause to increase their concerns of capital market. The pu rpose of this research is investigating the relationship between “independent audit quality” as an independent variable, and “earnings management” and “cost of equity capital” as dependent variables. Market shares used for calculating auditor industry specialization as an audit quality proxy. Earnings management was calculated through discretionary accruals with using modified Jones model. With considering some characters, statistical society includes 147 listed companies on Tehran Stock Exchange during 1386 to 1389..............
The results express, there is a conversing relationship exists between audit quality and earnings management . Furthermore, cost of equity capital decreases with increasing audit quality. In the other words,,,,, there is a significant relationship between variables.
Independent audit quality, Earnings management, Cost of equity capital, Discretionary accrual