... costs and cash flows on observed leverage adjustments Both of these examples indicate that a firm's cash flow situation may substantially affect its net incentive to move toward a target leverage ... stylized examples illustrate the joint effect of adjustment costs and cash flows on observed leverage adjustments ADJUSTMENT INTRODUCTION LEVERAGE TARGET FIRST EX 6/17 start out TARGET year If accessing ... (e.g., Hovakimian, Opler, and Titman, 2001; Korajczyk and Levy, 2003; Leary and Roberts, 2005) However, we are the first to interact adjustment speed measures with cash flows, and thus evaluate the...