A Field Study of the Impact of a Performance-Based Incentive Plan

Posted: 15 May 1995

See all articles by Rajiv D. Banker

Rajiv D. Banker

Temple University - Department of Accounting

Seok-Young Lee

Sungshin Women's University

Gordon Potter

Cornell University - School of Hotel Administration

Abstract

Much management accounting research focuses on design of incentive compensation contracts. A basic assumption in these contracts is that performance-based incentives improve employee performance. This paper reports on a field test of the multi-period incentive effects of a performance-based compensation plan on the sales of a retail establishment. Analysis of panel data for 34 retail outlets over 66 months indicates a sales increase when the plan is implemented an effect that persists over time. Sales gains however are significantly lower in the peak selling season when more temporary workers are employed.

JEL Classification: J33

Suggested Citation

Banker, Rajiv D. and Lee, Seok-Young and Potter, Gordon S., A Field Study of the Impact of a Performance-Based Incentive Plan. Available at SSRN: https://ssrn.com/abstract=55475

Rajiv D. Banker (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Seok-Young Lee

Sungshin Women's University ( email )

249-1 Dong-Dong 3-Ka Sungbuk-Ku
Department of Business Administration
Seoul 136-742
KOREA
+82 2 920-7464 (Phone)
+82 2 920-7363 (Fax)

Gordon S. Potter

Cornell University - School of Hotel Administration ( email )

435B Statler Hall
Ithaca, NY 14853-6902
United States
607-255-8061 (Phone)
607-255-4179 (Fax)

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