University of Isfahan Journal of Asset Management and Financing 2383-1189 5 3 2017 10 23 Capital Structure Stability in Tehran Stock Exchange Capital Structure Stability in Tehran Stock Exchange 35 56 21182 10.22108/amf.2017.21182 FA Manijeh Ramsheh PhD Student Faculty of Social Sciences and Economics, Department of Accounting, Alzahra University 0000-0001-9265-8819 Gholamreza Soleimani Amiri Associate Professor, Faculty of Social Sciences and Economics, Department of Accounting, Alzahra University Rasool Eskandari Lecturer in Accounting and Finance, Salford Business School Mohsen Gharahkhani Assistant Professor of Financial Engineering Group, Faculty of Financial, Iranian Institute of Higher Education, Tehran, Iran. Journal Article 2015 11 03 Cross-sectional stability of the leverage means that a firm’s current high or low leverage (relative to other firms) reliably predicts a comparable relative position in future cross-sections. The extent of stability in the cross-section is gauged by assessing the explanatory power of the current cross-section for future cross-sections going forward one year at a time and extending well into the future. This study examines the stability of leverage for 113 componies in Tehran Stock Exchange over the period 1999–2012. It conducts simulations that gauge the ability of random financing and a variety of leverage targeting models to replicate the instability of the crosssection over long horizons. The results show instability in leverage ratios. Target leverage models do a good job replicating the substantial instability of the actual leverage cross-section. Cross-sectional stability of the leverage means that a firm’s current high or low leverage (relative to other firms) reliably predicts a comparable relative position in future cross-sections. The extent of stability in the cross-section is gauged by assessing the explanatory power of the current cross-section for future cross-sections going forward one year at a time and extending well into the future. This study examines the stability of leverage for 113 componies in Tehran Stock Exchange over the period 1999–2012. It conducts simulations that gauge the ability of random financing and a variety of leverage targeting models to replicate the instability of the crosssection over long horizons. The results show instability in leverage ratios. Target leverage models do a good job replicating the substantial instability of the actual leverage cross-section. https://amf.ui.ac.ir/article_21182_68a529c66db8c615bf2130ae5148c315.pdf