• Organisation
    contributions made by the employee for the organization. Contents[hide] * 1 Background * 1.1 Definition of equity * 1.2 Inputs and outcomes * 1.2.1 Inputs * 1.2.2 Outcomes * 1.3 Propositions * 2 Equity theory in business * 2.1 Assumptions of equity theory applied to...
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  • Leading Organisation
    , gives some example of self expectation within an organization, and provides some recommendations that how the organizational leader could use the equity theory to motivate employees. Mayes (1978) explained that the equity theory “bases behaviour on attitude or behavioural intent, it defines an...
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  • Capital Structure, Interest Rates and Credit Ratings
    Structure Matters To Investments How Debt and Equity Financing Differ Choosing Between Debt and Equity Financing Process Ownership rights Rights over profit Ease of doing business Repayment Cost to company Future funding Choice of capital Obtained from Debt-to-equity ratio Requirements Advantages...
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  • Accounting
    . From our examples, you can see that owner's equity increased when the owner made an investment in the business and also when revenues were earned. Owner's equity decreased when the owner withdrew assets from the business and when expenses were incurred. This leads us to the expanded accounting...
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  • Pecking & Trade Off Theory
    example, it is probably the case that firms have long-run, target capital structures, but also probably true that they will deviate from those long – run targets as needed to avoid issuing new equity. Myers (1984) suggested that the order of Preference stemmed from the existence of asymmetry...
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  • Motivation
    the individual is going to work hard or not depending upon the rewards and possible outcomes. This paper discusses and describes the equity theory of motivation with its implications to managers in the light of a real organizational example. Analysis: John Stacey Adams, a workplace and...
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  • Doctor
    borrower (as higher interest rates, for example).  Loss of Future Flexibility: When a firm borrows up to its capacity, it loses the flexibility of financing future projects with debt. Benefits and Costs of Equity Financing Benefits of Equity  Commitment to business: The funding is committed the...
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  • Are the Distinction Between Debt and Equity Disappearing
    , why these changes have occurred, and the implications of these changes for public policy. In general, the participants observed that no simple theory explains fully the recent trends in business finance. For example, tax laws alone do not determine a corporation’s capital structure. A satisfactory...
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  • Chapter 15 Mini Case
    insights into the value of debt versus equity financing. An understanding of capital structure theory will assist a manager in finding their firm's optimal capital structure. MM theory suggests that a firm's value is unaffected by its capital structure when there are no taxes. When the impact of...
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  • Advanced Managerial Finance Mini Case
    levered beta, the cost of equity, and the WACC. MM theory implies that beta changes with leverage. bu is the beta of a firm when it has no debt (the unlevered beta.) Hamada’s equation provides the beta of a levered firm: bL = bU [1 + (1 - T)(D/S)]. For example, to find the cost of equity for wd...
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  • Determinants of Capital Structure
    from stocks lowers the required rate of return on stock and favors the use of equity financing. (Miller, 1977). On the other hand there are several useful conditional theories about debt to equity choice. For example, “the tradeoff theory says that firms seek debt levels that balance the tax...
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  • Understanding the Time Value Money Formula
    company has invested in. The type of business also affects the company’s beta. In companies where customers affect the selling price of the company’s products by for example delaying payments, the betas are usually. (Financial Time). (Nov. 20, 2012). The Cost of Equity 1.    Take the beta value...
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  • Capital Budgeting - the Western Company
    , retained earnings asset beta or unlevered beta ks =kd + rp CAPM - Capital Asset Pricing Model -financial risk - what is the company's capital structure? What is their debt/equity? Current Ratio? C) How does business risk affect...
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  • Is It Important for a Manager to Consider Equity Theory When Striving to Improve an Employee’s Job Satisfaction and Motivation?
    believe to be experienced or enjoyed by others in similar situations. This comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of motivation than typically arises in motivational theories and models based on individual circumstance alone. For example, Equity Theory...
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  • Determine the Drivers of Capital Structure
    business plan is likely to secure debt thus will be leveraged than a firm that has no plan or strategy thus obtaining debt becomes difficult making the capital structure to have equity as the main source of finance. Business risk It is the basic risk of the company’s operation. The greater the...
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  • Capital Structure
    investment effect Trade off theory focuses on a point that a company can choose the level of debt finance and equity finance by balancing the costs and benefits of financing. It is important to understand the cost and benefits that can be extracted from a particular way of financing. For example debt...
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  • Cost of Capital
    Cost of Capital Theory of cost of capital Bottom of Form Cost of capitaltheory attempts to explain whether a company's mix of equity and debt affects its stock price. Two types of cost of capitaltheory can be distinguished: the net operating income theory and the net income theory. In the...
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  • Financial Management
    theory seems to stand out and is the most popularly used in the business world as far as financing of a company is concerned. The Modigliani and Merton Miller theorem: This perhaps the most widely accepted capital structure theory due to the fact that it suggests that“… the market value of a firm is...
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  • Capital Structure Theories
    equity shareholders perceive financial risk and expect premiums for the risks undertaken. This theory also states that after a level of debt in the capital structure, the cost of equity capital increases. Example:  Let us consider an example where a company has 20% debt and 80% equity in its...
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  • Capital Structure theories
    . Example:  Let us consider an example where a company has 20% debt and 80% equity in its capital structure. The cost of debt for the company is 9% and the cost of equity is 14%. According to the traditional approach the overall cost of capital would be: The Net Income theory and Net Operating...
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