Value maximization of a firm depends heavily on the financial leverage of the company. This is measured by the debt-�����to-�����equity ratio, which explains what proportions of debt and equity are being used to finance the firm���s assets. By adjusting this ratio, firms can influence their stock performance. In this study, I estimate the value function for each firm and take the derivative with respect to the debt-�����to-�����equity ratio. By setting this equal to zero, I solve for the optimal debt-����� to-�����equity ratio or the ratio that maximizes firm value. The difference between the optimal and historically observed debt-�����to-�����equity ratios is called the margin. Variables like market capitalization, trading volume, and book-�����to-�����market ratio can influence margin, as my test results show. Furthermore, I find that margin can influence stock returns of the firm, and it does so in a negative and significant way. By minimizing margin, companies are able to influence the magnitude of stock returns.