Underinvestment problem
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Underinvestment problem is a type of agency problem in which high debt can cause managers to forgo positive NPV projects unless they are extremely safe.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Underinvestment problem. A type of agency problem in which high debt can cause managers to forgo positive NPV projects unless they are extremely safe.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
