Assessing the impact of budgetary participation on budgetary outcomes: the role of information technology for enhanced communication and activity-based costing

Abstract

This paper addresses the long-standing question of how budgetary participation (BP) affects budgetary outcomes. Information technology for enhanced communication (ITEC) and activity-based costing (ABC) are taken into consideration as moderators that might affect the relationship between BP and budgetary outcomes in manufacturing firms. Based on moderated and polynomial regression analyses, the study's findings indicate that the main effects of BP, ITEC and ABC on budgetary outcomes are not significant, and that while ABC significantly moderates the relationship between budgetary participation and budgetary slack, ITEC does not moderate this relationship. Results also indicate that both ITEC and ABC significantly moderate the relationship between budgetary participation and managerial performance. These findings suggest that the effect of budgetary participation on budgetary outcomes can be contingent on ITEC and ABC although their impact varies with the nature of budgetary outcomes.

The effect of organizational commitment and Cost management knowledge on the relationship between budget participation and managerial performance

“…Managerial performance measurement using self-rating on management functions. The management functions include planning, investigation, coordination, evaluation, supervision, staffing, negotiation, representation, and overall performance (Mahoney et al 1965) The measurement consisted of 9 indicators namely and using a 7point Likert scale which has been widely used in previous studies (Indriani & Nadirsyah, 2015;Maiga et al, 2014;Nuraini & Rosyati, 2012;Wong-On-Wing et al, 2010)…”

“…Budget participation is a process that involves various managerial levels in budgeting (Brink et al, 2018) and influences the budget (Shields & Shields, 1998). This variable is measured by a 7-point Likert scale consisting of 6 indicators from Milani (1975) that has been used by many previous studies (Jermias & Yigit, 2013;Maiga et al, 2014;Farahmita, 2016;Ernis et al, 2017).…”

“…Accordingly, many studies link budgetary participation and managerial performance with the contingency approach. Contingency variables that used in the studies such as Cost management knowledge (CMK) (Agbejule & Saarikoski, 2006;Farahmita, 2016;Santos et al, 2014;Savitri et al, 2015), organizational commitment (Arifuddin et al, 2017;Gunawan & Santioso, 2015;Murwaningsari, 2008;Nuraini & Rosyati, 2012), motivation (Gunawan & Santioso, 2015), management accounting system (Indriani & Nadirsyah, 2015), ITEC, activity-based costing (Maiga et al, 2014).…”

Budgetary Participation’s Antecedent of Information Asymmetry and its Outcomes

“…Budgetary participation is usually defined in accounting literature as a process in which managers are involve with, and have an influence on, the determination of their budget's settings (Shields & Shields 1998). This practice has been one of the most examined topics in management accounting studies (Brownell 1981;Brownell 1982;Chong & Johnson 2007;Heinle et al 2013;Kren 1992;Maiga et al 2014;Nouri & Parker 1996;Yuen 2007).…”

“…Research on budgetary participation can be divided into two main streams. In the first stream, many studies focus on the question of how budgetary participation can reduce the budgetary slack created by managers (Govindarajan 1986;Lau & Eggleton 2003;Maiga et al 2014;Merchant 1985a;Onsi 1973). This question is based on the argument that budgetary participation serves as a motivational mechanism, which alters the managers' mental state (e.g.…”