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Target ratcheting and effort reduction

Bouwens,J.F.M.G.
; 
Kroos,P.
Abstract
In this paper, we examine how retail store managers reduce their sales activity in response to target ratcheting. We find that managers with favorable sales performance in the first three quarters reduce their sales activity in the final quarter. We also document that managers who engage in sales reducing activities enhance their likelihood of meeting their next-year sales target, which is based on their current sales. That is, managers who reduce their sales activity in the final quarter are more likely to beat their next-year sales targets than managers who refrain from reducing their final-quarter sales.
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Date
2011
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Tilburg University Research Output Collection
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Keywords
target setting, Ratchet effect, manipulating real economic activities, J33 - Compensation Packages ; Payment Methods, M40 - General
Citation
Bouwens, J F M G & Kroos, P 2011, 'Target ratcheting and effort reduction', Journal of Accounting & Economics, vol. 51, no. 1-2, pp. 171-185. https://doi.org/10.1016/j.jacceco.2010.07.002
URI
https://hdl.handle.net/20.500.14602/53234
License
info:eu-repo/semantics/closedAccess
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