Firms Actively Rebalance Leverage to Optimize Capital Structure Dynamically.
The article examines how companies manage their finances, finding that they adjust their debt levels over time to maintain an optimal range. When their stock prices change, firms change their debt levels in response, but this adjustment can be delayed due to costs. The longer it takes to adjust, the higher the costs. This suggests that firms are actively optimizing their debt levels, rather than being indifferent to their financial structure.