The following actions by managers are examples of overinvestment:
A)entrenching investments.
B)empire building.
C)entrenching investments and empire building.
D)entrenching investments, empire building, and investing beyond the point where NPV falls to zero.

Question

Quizplus · Accepted Answer

Overinvestment occurs when managers invest in projects that do not maximize shareholder value. This includes entrenching investments, empire building, and investing beyond the point where the net present value (NPV) falls to zero, as these actions do not contribute positively to the firm's value.

The Following Actions by Managers Are Examples of Overinvestment