Will they be dissatisfied with the job? Will they create problems within the team? Will they resent the loss of status, or dislike having a boss who is younger or less experienced than they are? Will they leave when something better comes along? Will they demand more money down the track?
Getting it wrong is expensive and it is a brave manager who takes the path of greatest risk, even for the promise of great rewards. These concerns are borne out by significant amounts of research that show overqualified candidates have lower levels of job satisfaction and psychological wellbeing.