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