An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

John R. M. Hand
Univeristy of North Carolina - Chapel Hill

Abstract: This study explores the roles that three kinds of nonfinancial variables—people, patents and policies—play in generating firms’ near-term annual sales revenue. Due to data limitations on these variables for public companies, I use a rich and detailed set of information taken from surveys of private venture-backed firms conducted by VentureOne. By means of a Cobb-Douglas-type revenue model, I find that firms’ one-year-ahead forecasts of sales revenue are larger the higher are their current revenues; the more rapidly their personnel and granted patents are growing; the more business development, finance, marketing, sales, technical and other staff they employ; and when a formal sales commission plan is in place. Forecasted revenues are lower when firms are in the development and clinical trials stages of life, but are uncorrelated with the number of administrative employees and the presence of a defined bonus compensation plan.

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