The equity theory may contribute to improve our understanding of communication and effectiveness of managers from the subordinates’ point of view. The equity theory was first developed in 1963 by John Stacey Adams(1) , and follows the principle that subordinates need fair treatment in organizations to be satisfied with their jobs. Yamnill and McLean (33) defined equity as the “belief of employees being treated fairly in relation to others and inequity is the belief that employees are treated unfairly
Equity theory of motivation was developed in the early 1960’s by J. Stacey Adams. It recognizes that motivation can be affected through an individual's perception of fair treatment in social exchanges and professional competency. Equity Theory proposes that a person's motivation is based on what he or she considers being fair when compared to others (Redmond, 2010). As noted by Gogia (2010), when applied to the workplace, Equity Theory focuses on an employee's fair treatment, work-compensation relationship
out in developed countries apply to Nigeria? Which of the capital structure theories apply to Nigeria: the trade-off theory or the Pecking order theory? This paper conducts a critical survey of the key literature in order to isolate the leading theoretical and empirical issues surrounding capital structure choice of firms in developed economies and apply these to firms in Nigeria in order
two major classes of financing for a business are debt and equity. The contractual obligations order about what return is to be paid for the finance and when it is due. Equity holders are the residual claimants of all the business’ returns, posture most
2.2 Trade-off Theory According to Murray and Vidhan (2007), trade-off theory is a solution to balance marginal costs and marginal benefits. From their survey, there are two definition to explain this theory. Firstly, a firm is said to establish the static trade-off theory if the firm’s leverage is determined by a single period trade-off between the tax benefits of debt and the deadweight costs of bankruptcy. Second, a firm is said to exhibit target adjustment behavior if the firm has a target level
MODIGLIANI AND MILLERS THEORIES AND ITS WEAKNESS Arnold (2013) stated that financial economists Modigliani and Millers created a simplified model for capital structure decision by making some assumptions in 1958 (pp.830). The assumptions are that there is no taxation, perfect capital markets with perfect information available to all economic agents and no transaction costs, no costs of financial distress and liquidation, firms can be classified into distinct risk classes and individuals can borrow
Critical review of the Gearing Theory 3.1 Traditional Gearing theory Skare (2002) stated in his research that the traditional gearing theory excludes the short-term financing from the cost of capital calculation which the firm’s capital structure can be viewed as a required rate of return that must be earned on an investment leaving the firm’s value unaffected which supported the traditional gearing theory. Afrasiabishani (2012) also supported the traditional theory by stating that traditional approach
For the need theory to depicted this is a basic logic. A NEED THEORY OF MOTIVATION According to Janes Stoner (2005) need theory has been seen as the theory of motivation that addresses what people need or required to live a fulfilling lives particularly with regard to work. The following are some of the ‘need theories that has been propounded by different theorist. i. Hierarchy of need theory — Maslow ii. ELG Theory — Aderfer iii. Herzberg two fall or theory etc. In this work we
components, the Debt and the equity. Debt: A sum of money that is owed or due. Whatever a company has on its own, money, goods, services & other liabilities of the company which are due all comes in this heading Debts. Equity: The value of Share issued by a company. It is commonly referred as the ordinary share, partial ownership, maximum entrepreneurial risk associated with the company. These shareholders have voting rights. The company’s capital structure- It is the blend of equity & debt financing, it’s
many future investors would have diversified portfolios from which unnecessary risk would have been essentially eliminated. It also generates a theory given relationship between the required return and systematic risk which has been known to frequent empirical research and testing. Thus, this is known to be a better method of calculating the cost of equity than the dividend growth model (DGM) in that it specially takes into consideration of a company’s level of systematic risk relative to the stock