Cost of capital is one of the concepts that has always been considered by financial experts and is the main factor in creating the gap between accounting profit and economic profit. The present study investigates the impact of institutional investors on the relationship between profitability and cost-effectiveness. This study is applied in terms of purpose and is a causal (post-event) type of research methodology. The statistical population of the study consisted of all listed companies in Tehran Stock Exchange. Using systematic elimination sampling method, 109 companies were selected and surveyed over a 5 year period between 2014 and 1977. The method used for data collection was library and multiple linear regression was used to test the hypotheses. Stata software version 15 was used to run the tests and final estimation of the models. The results show that there is a significant and inverse relationship between the predictability of profit and the cost of capital. Institutional investors have a significant reverse effect on the relationship between profitability and cost of capital.