If a Firm Is Privately Owned,and Its Stock Is Not

question 18

True/False

If a firm is privately owned,and its stock is not traded in public markets,then we cannot measure its beta for use in the CAPM model,we cannot observe its stock price for use in the DCF model,and we don't know what the risk premium is for use in the bond-yield-plus-risk-premium method.All this makes it especially difficult to estimate the cost of equity for a private company.

Understand the various aspects and effects of procedural justice, distributive justice, and equity theory.

Comprehend the impact of feedback mechanisms and their characteristics on employee motivation and performance.

Differentiate between different motivation theories including Maslow's Hierarchy of Needs, ERG Theory, and McClelland's Theory of Learned Needs.

Recognize the effect of comparison others on feelings of equity or inequity among employees.

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Definitions:

Agentic State

The psychological condition in which an individual sees themselves as an agent executing orders, often used to explain obedience to authority figures.

Higher Authority

A position of power or control above others, often within an organizational or governmental structure.

Referent Power

Referent power is a form of influence based on the charismatic appeal or personal attraction of the power-holder, leading others to identify with or seek approval from the individual.

Kelman's Sequence

A theory of social influence which outlines three processes through which attitudes can change: compliance, identification, and internalization.