IDEAS home Printed from https://ideas.repec.org/a/jfr/bmr111/v2y2013i2p13-21.html
   My bibliography  Save this article

Agency Theory Explanations of Self-Serving Sales Forecast Inaccuracies

Author

Listed:
  • Samuel Y. Todd
  • Tamara A. Crook
  • Tony Lachowetz

Abstract

The purpose of this paper is to develop and present a conceptual model that identifies factors contributing to accuracy in sales forecasts using agency theory¡¯s tenets. Drawing upon these tenets, a model is developed that identifies the incentives that encourage sales people to provide accurate versus inaccurate sales forecasts. Six research propositions are developed, practical implications of the model for compensation programs are discussed, and specific recommendations for future empirical work are identified. The model can guide managers on how to develop a more effective compensation system.

Suggested Citation

  • Samuel Y. Todd & Tamara A. Crook & Tony Lachowetz, 2013. "Agency Theory Explanations of Self-Serving Sales Forecast Inaccuracies," Business and Management Research, Business and Management Research, Sciedu Press, vol. 2(2), pages 13-21, June.
    • Handle: RePEc:jfr:bmr111:v:2:y:2013:i:2:p:13-21
    as

    Download full text from publisher

    File URL: http://www.sciedupress.com/journal/index.php/bmr/article/download/2713/1574
    Download Restriction: no
    File URL: http://www.sciedupress.com/journal/index.php/bmr/article/view/2713
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Amiya K. Basu & Rajiv Lal & V. Srinivasan & Richard Staelin, 1985. "Salesforce Compensation Plans: An Agency Theoretic Perspective," Marketing Science, INFORMS, vol. 4(4), pages 267-291.
    3. Vasudevan Ramanujam & N. Venkatraman, 1987. "Planning system characteristics and planning effectiveness," Strategic Management Journal, Wiley Blackwell, vol. 8(5), pages 453-468, September.
    4. Marjorie A. Lyles & R. T. Lenz, 1982. "Managing the planning process: A field study of the human side of planning," Strategic Management Journal, Wiley Blackwell, vol. 3(2), pages 105-118, April.
    5. J. Scott Armstrong, 1982. "The value of formal planning for strategic decisions: Review of empirical research," Strategic Management Journal, Wiley Blackwell, vol. 3(3), pages 197-211, July.
    6. Richard D. Boettger & Charles R. Greer, 1994. "On the Wisdom of Rewarding A While Hoping for B," Organization Science, INFORMS, vol. 5(4), pages 569-582, November.
    7. David J Sharp & Stephen B Salter, 1997. "Project Escalation and Sunk Costs: A test of the International Generalizability of Agency and Prospect Theories," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(1), pages 101-121, March.
    8. Russell L. Ackoff, 1967. "Management Misinformation Systems," Management Science, INFORMS, vol. 14(4), pages 147-156, December.
    9. Edward H. Bowman & Constance E. Helfat, 2001. "Does corporate strategy matter?," Strategic Management Journal, Wiley Blackwell, vol. 22(1), pages 1-23, January.
    10. Nilmini Wickramasinghe, 2006. "Expanding the explanatory power of agency theory for the knowledge economy," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 3(5), pages 510-520.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hau Lee & Seungjin Whang, 1999. "Decentralized Multi-Echelon Supply Chains: Incentives and Information," Management Science, INFORMS, vol. 45(5), pages 633-640, May.
    2. Manolis, Chris & Nygaard, Arne & Stillerud, Bård, 1997. "Uncertainty and vertical control: An international investigation," International Business Review, Elsevier, vol. 6(5), pages 501-518, October.
    3. Fiaz Ahmad Sulehri & Saba Sharif, 2022. "The Impact of Firm Sustainability on Firm Growth: Evidence from USA," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(2), pages 1-15, August.
    4. Krane, Ronja & Eulerich, Marc, 2020. "Going global: Factors influencing the internationalization of the internal audit function," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    5. Mähring, Magnus, 2002. "IT Project Governance: A Process-Oriented Study of Organizational Control and Executive Involvement," SSE/EFI Working Paper Series in Business Administration 2002:15, Stockholm School of Economics.
    6. Phillips, Paul & Moutinho, Luiz, 2014. "Critical review of strategic planning research in hospitality and tourism," Annals of Tourism Research, Elsevier, vol. 48(C), pages 96-120.
    7. Marion Festing & Ihar Sahakiants, 2011. "Determinants of share-based compensation plans in Central and Eastern European public companies: An institutional analysis," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 16(4), pages 338-357.
    8. Alexander T. Nicolai & Thomas W. Thomas, 2004. "Kapitalmarktkonforme Unternehmensführung: Eine Analyse im Lichte der jüngeren Strategieprozesslehre," Schmalenbach Journal of Business Research, Springer, vol. 56(5), pages 452-469, August.
    9. Obonyo Mark Ouche & David Odhiambo Oima & Moses Oginda, 2016. "Effect of Strategic Planning on Annual Income of National Sports Federations in Kenya," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(5), pages 41-64, May.
    10. Orhan Bahadır Doğan & V. Kumar & Avishek Lahiri, 2024. "Platform-level consequences of performance-based commission for service providers: Evidence from ridesharing," Journal of the Academy of Marketing Science, Springer, vol. 52(4), pages 1240-1261, July.
    11. Donal Crilly, 2013. "Recasting Enterprise Strategy: Towards Stakeholder Research That Matters to General Managers," Journal of Management Studies, Wiley Blackwell, vol. 50(8), pages 1427-1447, December.
    12. Julia Heidemann & Marcus Kaiser & Mathias Klier & Florian Probst, 2012. "Customer lifetime value-based sales force control in the financial services industry— an incentive-compatible remuneration model," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(1), pages 27-51, September.
    13. C. Chang & Sin-Hui Yen, 2007. "The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region," Journal of Business Ethics, Springer, vol. 76(3), pages 347-360, December.
    14. Mathias Arrfelt & Robert M. Wiseman & Gerry McNamara & G. Tomas M. Hult, 2015. "Examining a key corporate role: The influence of capital allocation competency on business unit performance," Strategic Management Journal, Wiley Blackwell, vol. 36(7), pages 1017-1034, July.
    15. Ghosh, Dipankar, 2000. "Complementary arrangements of organizational factors and outcomes of negotiated transfer price," Accounting, Organizations and Society, Elsevier, vol. 25(7), pages 661-682, October.
    16. Abbas Mohammed Hussein & Mohammed Mustafa Ahmed & Mohamed Yahya Mahmoud Khudari, 2021. "The Impact of Strategic Planning in the University’s Competitiveness According to NIAS," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 10, September.
    17. Rudd, John M. & Greenley, Gordon E. & Beatson, Amanda T. & Lings, Ian N., 2008. "Strategic planning and performance: Extending the debate," Journal of Business Research, Elsevier, vol. 61(2), pages 99-108, February.
    18. Lu, Qiongfang & Wilson, Craig, 2024. "Infrastructure financing in Africa," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    19. Salter, Stephen B. & Sharp, David J. & Chen, Yasheng, 2013. "The moderating effects of national culture on escalation of commitment," Advances in accounting, Elsevier, vol. 29(1), pages 161-169.
    20. Stefan Schweikl & Robert Obermaier, 2020. "Lessons from three decades of IT productivity research: towards a better understanding of IT-induced productivity effects," Management Review Quarterly, Springer, vol. 70(4), pages 461-507, November.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:bmr111:v:2:y:2013:i:2:p:13-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Simon Lee (email available below). General contact details of provider: http://bmr.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.