We find a negative association between the leverage deviation and leasing intensity, implying that firms actively use leasing as a source of financing when faced with a leverage deviation. This negative relation is more pronounced for firms that are underleveraged, are financially constrained,...

We study the relationship between a firm's leverage deviation from target debt ratio and its leasing intensity. We find a significant negative relationship between the deviation of leverage from target and leasing intensity, implying that firms actively use leasing as a source of financing when...