Asset Substitution Problem

Business, Legal & Accounting Glossary

Definition: Asset Substitution Problem


Asset Substitution Problem


Full Definition of Asset Substitution Problem


A situation which occurs when shareholders prompt a company to invest in assets that are riskier than what bondholders want (asset substitution). The newer, riskier investment potentially increases the return that shareholders will see from their stock, while increasing the risk that bondholders will bear due to the increased risk of bankruptcy.


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December 06, 2021 https://payrollheaven.com/define/asset-substitution-problem/.
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Asset Substitution Problem. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/asset-substitution-problem/ (accessed: December 06, 2021).
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Asset Substitution Problem. PayrollHeaven.com. Retrieved December 06, 2021
, from PayrollHeaven.com website: https://payrollheaven.com/define/asset-substitution-problem/

Definition Sources


Definitions for Asset Substitution Problem are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.