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

Scope of the content of the finance function, Q. Scope of the content of th...

Q. Scope of the content of the finance function? 1) Estimating of the finance requirement: the first task of a finance manager is to estimate and short terms and long terms fin

What are the market conditions of cost of capital, What are the Market cond...

What are the Market conditions of cost of capital Security may not be readily marketable when investor wants to sell; or even if a continuous demand for security does exist, p

Define assumption behind experience approach to forecasting, What is the pr...

What is the primary assumption behind the experience approach to forecasting? The experience approach to forecasting is relies on the assumption that things will happen a fixed

Organizational cost drivers, Organizational Cost Drivers It is the cost...

Organizational Cost Drivers It is the cost consequences that result from managerial choices concerning the company of activities as well as the involvement of persons inside an

Treasury bonds, Bonds issued by the government are termed as treasury...

Bonds issued by the government are termed as treasury bonds. For example, dated securities issued by the government. These bonds are normally issued for longer ma

Explain the meaning of - purchase consideration, Explain the meaning of - P...

Explain the meaning of - Purchase consideration The  type  of  offer  made  to  target  company's  shareholders  would have  a  big  impact on acceptance. Apparently the price

Define the term shareholders, Shareholders Shareholders are usually ass...

Shareholders Shareholders are usually assumed to be interested in wealth maximisation. This though involves consideration of potential return and risk. Where a company is liste

Illustrate the meaning of gearing, Illustrate the meaning of Gearing G...

Illustrate the meaning of Gearing Gearing is the relationship between equity anddebt. Debt is typically long term liabilities that the organisation has. Equity is all the shar

Unity of command, Unity of Command Unity of command is the principle in...

Unity of Command Unity of command is the principle in which each subordinate should be responsible to only one manager.

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