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The main objective of this study is to investigate the effect of financial information quality on liquidity risk and cost of equity using information of companies listed in the Tehran Stock Exchange. The period is the years between 2005 until 2009, and it reaches back to 2001 for collection of required information. Characteristics related to financial information quality that are used in this study are: Reliability, relevance, persistence, accuracy, precision and frequency of the revenue. The first three features are dedicated to quality of earning reported by the firm and the other three features refer to quality of management earning forecast. For measuring the cost of capital, Gordon Model is used. The Panel method is used for statistical analysis and the sample included 100 firms between years 2005 until 2009. Findings show a negative and significant relationship between the cost of capital and financial information quality.