Overcapitalization (Noun)
Meaning
(business) too much capitalization (the sale of more stock than the business warrants).
Classification
Nouns denoting acts or actions.
Examples
- The company's overcapitalization led to a dilution of shareholder value and a subsequent decline in stock price.
- Analysts warned that the startup's overcapitalization would make it difficult to achieve a reasonable return on investment.
- The firm's decision to issue more shares than necessary resulted in overcapitalization, which put a strain on its financial resources.
- Overcapitalization can be a major obstacle to a company's long-term success, as it can lead to inefficient allocation of resources.
- The entrepreneur's overcapitalization of her business venture ultimately led to its downfall, as she was unable to generate sufficient revenue to justify the investment.