Search results

1 – 10 of 616
Book part
Publication date: 17 February 2011

Vincent K. Chong and Irdam Ferdiansah

This chapter examines the effect an informal control namely trust-in-superior and subordinates’ truthfulness in revealing their private information on budgetary slack. A…

Abstract

This chapter examines the effect an informal control namely trust-in-superior and subordinates’ truthfulness in revealing their private information on budgetary slack. A laboratory experiment was conducted. A one-way analysis of variance (ANOVA) and ordinary least squares (OLS) regression were used to test the hypotheses proposed in this chapter. The independent variables were trust-in-superior and subordinates’ truthfulness in revealing their private information. The dependent variable was budgetary slack. The results indicate that trust-in-superior reduces the budgetary slack created by subordinates under private information condition. In addition, the results show that subordinates’ truthfulness in revealing their private information mediates the effect of trust-in-superior on budgetary slack.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-0-85724-817-6

Keywords

Book part
Publication date: 21 November 2018

Vincent K. Chong and Nurul Farhana Khudzir

This chapter examines the effect of mutual monitoring and the personality trait of need for achievement on subordinates’ budgetary-slack creation in a team-based…

Abstract

This chapter examines the effect of mutual monitoring and the personality trait of need for achievement on subordinates’ budgetary-slack creation in a team-based environment. Experimental results show that the creation of budgetary slack is lower when mutual monitoring is present than when it is absent. The results also show that a two-way interaction between mutual monitoring and the personality trait of need for achievement affects subordinates’ budgetary-slack creation.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78756-543-2

Keywords

Article
Publication date: 27 February 2021

Haliah

The purpose of this study is to empirically examine the influence of politics, culture and regulation on the budgetary slack and its impact on performance. Specifically…

Abstract

Purpose

The purpose of this study is to empirically examine the influence of politics, culture and regulation on the budgetary slack and its impact on performance. Specifically, the purpose of this study is to analyze the influence of culture, politics and regulation on budgetary slack and performance in local government.

Design/methodology/approach

Studies to develop model pengangaran good (good governance budgeting). Using the survey method. The total sample is 300 respondents in seven local governments in West Sulawesi. Respondents from the executive and legislative participate in the preparation of budgets in local government. The research instrument in questionnaire is tested using GSCA.

Findings

The third structural coefficient of the relationship is positive, indicating all three positive relationships. That is, the higher political, cultural, regulatory, will result in the higher budgetary slack. Thus, if one wants to reduce the budgetary slack, then one needs to reduce the problems of politics, culture and regulations. Other results obtained (a) significant political, cultural and regulatory effect on performance either directly or indirectly through budgetary slack. The sixth structural coefficient of the relationship is positive, indicating all six positive relationships. That is, the higher political, cultural and regulatory variables will lead to higher performance either directly or indirectly through budgetary slack; (b) information asymmetry and budgetary slack significantly affect performance. The second structural coefficient correlation is positive, indicating both positive relationships. That is, the higher information asymmetry and budgetary slack will result in higher performance; (c) budgeting participation moderating influence budgetary slack variables that are false and strengthen moderation. That is, the higher the value of participation budgeting (M) affects increasing influence through budgetary slack (Y1) on the performance (Y2).

Research limitations/implications

The results showed that the political, cultural and regulatory variables significantly affect the budgetary slack. The structural coefficient of the relationship of these three variables had positive-marked, indicating that the relationship of all those three was positive. Thus, the higher political, cultural and regulatory variables will result in higher budgetary slack. Political, cultural and regulatory variables significantly affected the performance both directly and indirectly through budgetary slack. Structural coefficient of the relationship of those six had positive-marked, indicating that the relationship of all those six was positive. Thus, the higher political, cultural and regulatory variables will lead to higher performance both directly and indirectly through budgetary slack.

Originality/value

This paper conducts a research on mediation effect of budgetary slack in relationship between politics, culture and regulation toward performance; this research retests the research result from Fisher (2002) about information asymmetry and performance, Rubin (1993) about political, budgetary slack and performance, Scott (2000) about regulatory, budgetary slack and performance, Indriantoro (2000) about mediation of budgetary slack in relationship between politics, culture and regulation toward performance and Mardiasmo (2005) about budgetary slack and performance. No studies have examined this kind of relationship simultaneously. location of study (no previous research for this relationship): local governments in West Sulawesi.

Details

International Journal of Law and Management, vol. 63 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 1 January 2000

Chong M Lau and Ian RC Eggleton

This research examines the interactive effect of accounting controls (Emphasis on meeting tight budget targets, External scanning, Results monitoring and Cost control) and…

Abstract

This research examines the interactive effect of accounting controls (Emphasis on meeting tight budget targets, External scanning, Results monitoring and Cost control) and task uncertainty on budgetary slack with a sample of 104 marketing and production managers. The results indicate that two accounting controls (Emphasis on meeting tight budget targets and External scanning) reduce the extent of budgetary slack creation in high task uncertainty situations, but not in low task uncertainty situations. Budgetary slack is lowest when the intensity of accounting controls and task uncertainty are both high. Whilst Emphasis on meeting tight budget targets has a significant effect on slack for both the production and marketing managers, External scanning has a significant effect only for the marketing managers.

Details

Asian Review of Accounting, vol. 8 no. 1
Type: Research Article
ISSN: 1321-7348

Open Access
Article
Publication date: 31 August 2017

Quang-Huy Ngo, Thi-Nam-Ninh Doan and Thanh-Nha Huynh

Although the budgeting literature well documents managers' creation of budgetary slack in developed economies, lack of attention has been paid to this behaviour in…

Abstract

Although the budgeting literature well documents managers' creation of budgetary slack in developed economies, lack of attention has been paid to this behaviour in emerging economies. It is doubtful that some unique characteristics, only existing in emerging economies, cause this behaviour to be different than the budgeting literature predicts. Since there is no study examining managers' creation of budgetary slack in emerging economies, such as Vietnam, to get insight into whether or not these characteristics cause the differences, the aim of this study is to replicate prior budgeting studies by using Vietnamese samples. Particularly, we investigated the impact of budgetary participation, budget emphasis, information asymmetry, and the interactions between these variables on managers' creation of budgetary slack. Data obtained from the questionnaire sent to 99 Vietnamese managers shows that the last two variables and the interaction between them induce managers' creation of budgetary slack. However, the results also indicate that the first variable and the interaction between this variable and the other two variables respectively have no impact on managers' creation of budgetary slack. These results provide some insight into the creation of budgetary slack of Vietnamese managers for future studies to extend the line of research.

Details

Asian Journal of Accounting Research, vol. 2 no. 2
Type: Research Article
ISSN: 2459-9700

Book part
Publication date: 13 December 2004

Kristin Wentzel

Prior research demonstrates a positive relationship between information asymmetry and managers’ use of budgetary slack and thereby suggests that minimizing managers…

Abstract

Prior research demonstrates a positive relationship between information asymmetry and managers’ use of budgetary slack and thereby suggests that minimizing managers’ private information is a potential tactic for reducing slack in budgets. Asymmetric information, however, often cannot be avoided when specialized technical expertise is required to operate a particular responsibility area. This study contributes to the literature by investigating whether favorable perceptions of fairness mitigate managers’ use of budgetary slack during participative environments in which managers hold private information. Overall, the findings demonstrate the benefits of fair budgeting practices. In particular, survey results suggest that the presence of budgetary slack in efficiency targets is lower for managers who hold favorable fairness perceptions. A gender effect is also demonstrated between perceptions of fairness and the presence of budgetary slack in spending targets. Factor analytical evidence toward the development of a more refined measure of budgetary slack is provided.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-0-76231-139-2

Book part
Publication date: 23 August 2014

Hossein Nouri and Larissa Kyj

The purpose of this study is to investigate how a combination of Normative Commitment (NC) and Instrumental Commitment (IC) affects the creation of budgetary slack when…

Abstract

Purpose

The purpose of this study is to investigate how a combination of Normative Commitment (NC) and Instrumental Commitment (IC) affects the creation of budgetary slack when the decision-making mode is individual versus group.

Methodology

We use 86 students in a two-by-two experimental design (individuals vs. groups and a combination of NC/IC vs. no NC/IC), fully crossed between participants, to examine the combined effects of NC/IC on budgetary slack creation by individuals and group members.

Findings

The results show that groups without NC/IC create the highest budgetary slack and differ from the other three experimental cells (groups with NC/IC and individuals with and without NC/IC). In addition, individuals with NC/IC also differ from individuals without NC/IC.

Research limitation

Research limitations are formation of groups, validity threats common to laboratory experiments, and generalizability of the findings. We do not believe these limitations are affecting the results.

Practical implications

As organizations continue to increase the use of group decision-making for setting their budgets, they may want to monitor groups with low NC/IC due to higher slack creation.

Social implications

Use of groups can impact prosocial behavior via creating a “label” and/or forming social ties in budgeting.

Originality/value of the paper

This study extends budgetary slack creation under individuals versus group decision-making, introduces the combined effects of NC/IC as a psychological contract to the accounting literature, and examines the combined NC/IC effect on groups as compared to individuals.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78190-842-6

Keywords

Article
Publication date: 19 September 2016

Susana Gago-Rodríguez and David Naranjo-Gil

The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such…

1380

Abstract

Purpose

The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such proposals involve different levels of managerial effort that impact overall budgetary slack.

Design/methodology/approach

This paper is based on a laboratory experiment with 160 business managers.

Findings

The results show that the more (less) middle managers trust (distrust) their upper-level managers, the more (the less) effort they commit to budgetary proposals. The authors also find that middle managers with low trust are prone to invest more effort and thus create less budgetary slack than managers with high distrust. The results also show that the introduction of suspicion does not vary this initial choice of effort and budgetary slack.

Research limitations/implications

This paper shows the importance of trust and distrust as informal control systems in organizations. The findings support the importance of extrinsic motivation for enhancing effort and reducing budgetary slack. There are a wide range of exogenous variables that have an effect on the development of trust and distrust.

Practical implications

Practitioners may improve their management control by facilitating trust and preventing distrust in interpersonal relationships because both are informal controls that can reduce and increase, respectively, dysfunctional behaviors in organizations, such as budgetary slack.

Originality/value

This paper is among the first to show the distinct effects of trust and distrust (high and low) in the efforts of middle managers. This study provides a dynamic viewpoint of trust through the introduction of suspicion in a budget negotiation.

Details

Management Decision, vol. 54 no. 8
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 1 March 2001

Wim A. Van der Stede

This study examines how two important situational factors (corporate diversification and business unit strategy) and two elements of a firm’s administrative system…

5263

Abstract

This study examines how two important situational factors (corporate diversification and business unit strategy) and two elements of a firm’s administrative system (accounting‐based budgetary controls and associated incentives) affect the presence of slack in business unit budgets in diversified firms. The relationships among these variables are established by building on theories from organizational economics, the information‐processing view of organizations, and organizational behavior. Data are collected from 37 firms and 153 business units within these firms. The main results indicate: that corporate diversification is positively associated with slack in business unit budgets; and that tight budgetary controls and high‐powered incentives effectively curtail such slack. However, diversification does not seem to drive corporate managers to rely more on these systems to reduce higher budgetary slack associated with diversification. This suggests: that diversified firms employ a conscious strategy of slack at the business unit level to reduce information‐processing needs at the top; or that the design of the internal management control system is a function of factors other than corporate diversification. With respect to the latter explanation, the results indicate that business units that pursue a differentiation strategy receive less tight budgetary controls, which leaves them with the necessary slack to effectively pursue the critical success factors on which their strategies are built.

Details

Accounting, Auditing & Accountability Journal, vol. 14 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 22 November 2011

Moataz Elmassri and Elaine Harris

The purpose of this paper is to draw on a small‐scale study that investigated the relationships between the budget‐setting process and slack, and how budgetary

4505

Abstract

Purpose

The purpose of this paper is to draw on a small‐scale study that investigated the relationships between the budget‐setting process and slack, and how budgetary, behavioural and contextual factors can affect this relationship, to reconceptualise the phenomenon of budgetary slack as a budget risk management strategy.

Design/methodology/approach

A case study method was employed, which enabled the researchers to investigate factors suggested by prior literature that affect slack creation. In total, nine structured interviews were conducted in a state‐owned Egyptian petroleum company, which gave the researchers a different way of thinking about the budget slack phenomenon.

Findings

The authors found that slack is created, but not perceived negatively by managers, wherever they are in the organisational hierarchy. Few factors from the literature appeared to have any effect on the creation of budgetary slack, but the covert view of budget slack as a negative behaviour, adopted by early literature was perceived by participants as unethical and inconsistent with Egyptian culture. Managers did not recognise the notion of budgetary slack, though a “contingency” was created and was seen as entirely rational and acceptable by both superiors and subordinates. These findings are consistent with more recent literature in taking a more positive view, and with risk management thinking.

Research limitations/implications

The evidence from this small study in a single organisation obviously cannot be generalised to the whole population. More research is needed in different contexts in order to discover whether managers may perceive this link between budget contingencies and risk management. Also, further research may explore the ethical dimension of behaviour and its possible foundation in religious values and beliefs, to see if this influences how building “contingencies” into budgets is perceived.

Practical implications

If we were to stop portraying the creation of budgetary slack as a negative behaviour and accept that practitioners find it acceptable in managing budgets in an uncertain economic environment, more managers may be open about it.

Originality/value

The main contribution of this paper is that it proposes that what was originally described as a negative behavioural phenomenon be rethought as a positive risk management strategy. Though other authors have viewed budget slack more positively, none has made the explicit link to risk management. The authors reposition budget slack in terms of contingency planning and show how this is consistent with risk management thinking.

Details

Journal of Applied Accounting Research, vol. 12 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

1 – 10 of 616