Equity theory, Financial Management

Assignment Help:

Equity Theory

This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute calculation but is a relative calculation. If they calculate that others are getting more outcomes (salary, success) for the same input (effort) they perceive in equality. When people perceive an imbalance in their out- come/input ratio, tension is build up which gives a basis for motivation as people strive for perceived equity and fairness. Based on equity theory in conditions of perceived inequity employees can be predicted to make one of various choices. They can change their inputs (decrease effort), they can change their output (increase productivity), or reframe the conditions (distorting perceptions by changing referent other). Equity theory is not restricted to finance. It has been shown that job titles as well as office space and selection for project groups may also function as outcomes for some employees in their equity equation.


Related Discussions:- Equity theory

Tax consideration affect cost of debt and cost of equity, How do tax consid...

How do tax considerations affect the cost of debt and the cost of equity? As interest on debt is tax deductible to the issuing firm, as much higher the tax rate the lower the aft

Explain how management goals are incorporated into pro forma, Explain how m...

Explain how management goals are incorporated into pro forma financial statements. Management locates a target goal, and forecasters produce pro forma financial statements within

Valuing zero-coupon bond, As we know, zero-coupon bonds are issued wi...

As we know, zero-coupon bonds are issued without any periodic coupon payments. The investor gets the interest and the principal on a maturity date. The interest i

Define the p/e valuation method, Define the P/E valuation method. Under wha...

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio specifies how much investors are willing to pay for each dol

Explain the strategy for product development, Product development A str...

Product development A strategy which tends to increase sales by the development of new services or products to the same market for example an entirely new or improved existing

Discuss the pros and cons of financing in unhedged, You have the following ...

You have the following information about rates in London for Eurocurrency loans of one-year duration, the exchange rate between the USD and euros, the currency in which you want fi

Caselets, caselets of bajaj electronics

caselets of bajaj electronics

What do you mean by utility, Q. What do you mean by Utility? Utility: -...

Q. What do you mean by Utility? Utility: - Financial leverage assists considerably the financial manager while devising the capital structure of the company. A high financial l

Calculate the net investment of the firm, Problem: i) Assume a firm bu...

Problem: i) Assume a firm buys a new tooling machine for Rs 2000,000, installation costs net of taxes are Rs 300,000. An existing asset has a book value of Rs 400,000 and the

Define the constructive receipt, Q. Define the Constructive Receipt? Co...

Q. Define the Constructive Receipt? Constructive Receipt - A taxpayer is considered to have received income even though monies are not in hand, it may have been set aside or ot

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd