We find that equity mispricing impacts the speed at which firms adjust to their target leverage and does so in predictable ways depending on whether the firm is over- or underlevered. For example, firms that are above their target leverage and should therefore issue equity (or retire debt),...

Existing studies of capital structure show a positive association between tangible assets and leverage, but these studies have ignored the potential systematic variation in magnitude due to institutional heterogeneity across countries. Using a sample from 32 countries, we find that the...