Issue Stock or Debt?

This makes a lot of sense:

Managers avoid issuing equity when investors disagree with their expectations on the profitability of new investment projects. Issuing equity under these conditions would drive the stock price down. If managers are interested in short-term stock price movements, they will issue equity when they have the same expectations as investors. This implies that equity issuance will prevail when stock prices are high, and debt issuance when they are low. It also implies that equity issuance is followed by increased capital expenditure. These predictions are confirmed by the recent issuing behavior of US companies.