Abstarct: The aim of this study is to investigate the effect of financial flexibility on stock price fluctuations in companies listed on the Tehran Stock Exchange. The statistical population of the study included all companies listed on the Iranian Stock Exchange and the sampling was done in a way that was considered an appropriate representative of the statistical population. The present study examined the relationship between financial flexibility and future stock returns, the effect of positive changes in flexibility on stock returns, and the mediating role of financial risk in the form of three hypotheses. Descxriptive and inferential statistical methods were used to analyze the data. The Kolmogorov-Smirnov tests were used to check the normality of the data and regression tests were used to test the hypotheses. The results showed that financial flexibility has a positive and significant effect on the future stock returns of companies (β=0.224, t=3.332, P<0.01). Also, positive changes in flexibility led to a significant increase in future stock returns (β=0.109, t=2.084, P<0.05). Finally, the mediating role of financial risk was also confirmed in the relationship between financial flexibility and stock returns, and it was found that increasing financial flexibility reduces risk and, as a result, reduces stock return volatility (β=-1.199, t=3.412, P<0.001). In general, the findings of this study indicate that financial flexibility, as one of the key factors in improving returns and reducing stock risk, plays an important role in companies' financial policy-making. Accordingly, it is suggested that financial managers of companies take steps to improve the stability and sustainability of company stock returns by adopting policies that increase financial flexibility.