Asymmetric information and excess budget: the influence of performance-based budgeting on budgetary slack in US states

Park, Sung-Jin; Jang, Sungkyu

doi:10.1080/12294659.2022.2027599

Cited by 5 publications

(1 citation statement)

References 57 publications

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“…Secondly, a substantial body of literature has delved into various aspects of PBB, encompassing its connotation, realization path, factors, and incentive and restraint mechanisms (Hou et al, 2011;Schick, 2014;Park, 2019;Park and Jang, 2021). Nevertheless, a paucity of studies have scrutinized the economic rami cations of PBB, and even those studies that have done so, have solely concentrated on its macroeconomic and governmental implications (Kwon, 2018; Yuhertiana and Fatun, 2017; Shahvalizadeh and Fouman Ajirlou, 2020).…”

Section: Introductionmentioning

confidence: 99%

Can Performance-Based Budgeting Improve Corporate Innovation? Evidence from Chinese Listed Firms

wang,

2023

Preprint

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This paper explores the correlation between performance-based budgeting and corporate innovation in China, utilizing a quasi-natural experiment. The study reveals a significant rise in patents among firms headquartered in provinces that have implemented performance-based budgeting compared to those that have not. The increase is particularly pronounced for firms operating in provinces facing higher financial pressure and stronger government audits. The positive impact of performance-based budgeting on corporate innovation is particularly noteworthy in state-owned firms, firms exhibiting good corporate governance practices, or firms facing high financial constraints. Collectively, the evidence implies that performance-based budgeting can serve as a catalyst for corporate innovation. JEL: H61; M21; M41

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