One of the most important issues in financing corporate is to find appropriate method to make a wise selection between getting loans and increasing the number of shares. There are different theories for making appropriate financing methods. The primary purpose of this paper is to investigate this issue based on market timing theory. The proposed model of this paper chooses selective companies from Tehran Stock Exchange. The proposed model of this paper uses regression analysis on two different models. The primary purpose of the first model given in this paper is to study the effect of market timing theory. In this part of survey, we measure the effect of the ratio of market value to book value on the sources of financing firms though increase in equities. Based on the results, we can conclude that as the ratio of market value to book value increases, firms tend to increase their equity though an increase to the number of shares. The first hypothesis of this paper is confirmed. The second model is associated with the relationship with mean ratio of market value on weighted book value and Leverage and the results of this paper do not confirm such relationship.

Nasiri, H & Serkani, S. (2012). An empirical study on market timing theory: A case study of Tehran Stock Exchange.Management Science Letters, 2(8), 2863-2868.

Antoniou, A., Zhao, H., & Zhou, B. (2009). Corporate debt issues and interest rate risk management: Hedging or market timing? Journal of Financial Markets, 12(3), 500-520.

Butler, A.W., Cornaggia, J., Grullon, G., & Weston, J.P. (2011). Corporate financing decisions, managerial market timing, and real investment. Journal of Financial Economics, 101(3), 666-683.

Elliott, W.B., Koëter-Kant, J., & Warr, R.S. (2007). A valuation-based test of market timing. Journal of Corporate Finance, 13(1), 112-128.

Elliott, W.B., Koëter-Kant, J., & Warr, R.S. (2008). Market timing and the debt–equity choice. Journal of Financial Intermediation, 17(2), 175-197.

Hu, Z., Han, L., & Guo, X. (2011). An empirical analysis on the relationship between IPO waves and market timing on the basis of product market competition in China. Procedia Environmental Sciences, 11(A), 218-226.

Jasemi, M., Kimiagari, A.M., & Memariani, A. (2011). A modern neural network model to do stock market timing on the basis of the ancient investment technique of Japanese Candlestick. Expert Systems with Applications, 38(4), 3884-3890.

Mahajan, A., & Tartaroglu, S. (2008). Equity market timing and capital structure: International evidence. Journal of Banking & Finance, 32(5), 754-766.