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Considered one of the justice theories, equity theory was first developed in the 1960s by J. Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others. [2]
Equity, or economic equality, is the construct, concept or idea of fairness in economics and justice in the distribution of wealth, resources, and taxation within a society. Equity is closely tied to taxation policies, welfare economics , and the discussions of public finance, influencing how resources are allocated among different segments of ...
A higher debt-to-equity ratio leads to a higher required return on equity, because of the higher risk involved for equity-holders in a company with debt. The formula is derived from the theory of weighted average cost of capital (WACC). These propositions are true under the following assumptions: no transaction costs exist, and
The following video is part of our "Motley Fool Exclusive Interview" series. In this segment, Fool.com analyst Brendan Byrnes interviews author and Bloomberg reporter Jason Kelly about his recent ...
Equity theory is a more socialised approach toward understanding the effects of vertical pay dispersion in an organisation, than tournament theory. [32] Equity theory is based on the idea that individuals will evaluate the perceived fairness of their workplace or job by assessing the ratio of their work inputs to the outcomes they receive.
Pay equity advocates for fair and equitable compensation structures where employees are remunerated based on the value of their work rather than personal characteristics.
But it plays a part in equity-building, too: The faster you can pay down the loan principal, the quicker your equity stake increases. So you want to pay as little in interest as possible.
The idea of organizational justice stems from equity theory, [10] [11] which posits that judgments of equity and inequity are derived from comparisons between one's self and others based on inputs and outcomes. Inputs refer to what a person perceives to contribute (e.g., knowledge and effort) while outcomes are what an individual perceives to ...