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|Title:||The Effect of Sales Incentives on Business Seasonality|
|Series/Report no.:||Working Papers (Princeton University. Industrial Relations Section) ; 354|
|Abstract:||This paper shows that, in addition to varying with the calendar business cycle, manufacturing ﬁrms‘ sales are significantly higher at the end of the ﬁscal year, and lower at the beginning, than they are in the middle. The causes of these ﬁscal-year effects are investigated, emphasizing the role of salespeople and their motivation to meet quotas and earn a bonus. In many industries ﬁrms have substantially lower average prices toward the end of ﬁscal years, but price changes cannot explain all the effect of ﬁscal years on revenue seasonality. It is shown that the industry variation in the ﬁscal year revenue and price effects are correlated with type of product, distribution method, and the industry average salesperson turnover rate. The results are consistent with a sales quota model of ﬁscal seasonality, where all salespeople can vary their effort throughout the ﬁscal year but only some salespeople can inﬂuence the timing of their customers’ purchases.|
|Appears in Collections:||IRS Working Papers|
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