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Overinvestment

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Overinvestment
In corporate finance, this refers to managers not acting in the best interests of the shareholders and investing too much (potentially in negative net present value projects).

Overinvestment
A situation in which the management of a publicly-traded company invests in too many projects, especially when the projects do not benefit shareholders. Overinvestment may be a violation of the management's fiduciary responsibility to shareholders, especially when the managers benefit from the arrangement and investors do not.


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As the government also recognizes, however, the time has come to begin slowing the very rapid pace of loan growth, which raises risks of overinvestment, overcapacity and ultimately bad loans.
By focusing on non-price competition, we establish incentives for overinvestment in advertising by the incumbent firm, which contrasts with results for entry deterrence under price or quantity competition, as previously discussed.
The report also warned about dangers of rapid credit growth in a few countries, especially China, that could create risks of overinvestment, unsustainable asset price inflation and a worsening of credit quality.
 
 
 
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