Meaning of underlevered | Babel Free

Definitions

Having too little leverage.

not-comparable

Examples

“Our results also imply that offsetting the accumulated deviation from the target⟳ is not the primary reason⟳ for issuing or repurchasing equity. Equity repurchases follow⟳ periods of rising leverage deficit, but they fail⟳ to offset any significant portion of the accumulated deviation from the target⟳. Equity issuers are underlevered rather than overlevered prior to the issue⟳.”

“Faced with major investment shocks, underlevered firms are more likely to take⟳ advantage of debt financing opportunities because issuing debt is cost-efficient given the relatively low marginal adjustment costs in this case (Faulkender et al., 2012), and an underlevered firm faces a lower level of default risk⟳ than its overlevered counterpart.”

CEFR level