The paper examines whether security issues and repurchases adjust the capital structure toward the target. The time-series patterns of debt ratios imply that only debt reductions are initiated to offset the accumulated deviation from target leverage. Debt issues, equity issues, and equity repurchases do not offset the deviation from the target. The importance of target leverage in earlier debt-equity choice studies is driven by the sub-sample of equity issues that are accompanied by debt reductions. The timing of equity transactions is driven by market conditions. Firms issuing or repurchasing equity can pursue market-timing strategies because their target debt ratios are low and because equity transactions induce only small deviations from these targets.