The Effect of Attitudes Towards the Budgetary Process on Attitudes Towards Budgetary Slack and Behaviors to Create Budgetary Slack

Huang, Chusheng; Chen, Mien-Ling

doi:10.2224/sbp.2009.37.5.661

Cited by 8 publications

(12 citation statements)

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“…Stevens (2002) found that ethical and reputational concerns might influence budgetary slack creation. Huang and Chen (2009, p. 669) investigated the effect of managers’ attitudes towards the budget process and creation of slack on the incidence of budgetary slack, describing this behaviour as “underhanded and devious tactics”. With few exceptions, the language used in this stream of research has remained stuck in the negative paradigm, which influenced our own small‐scale study.…”

Section: Introductionmentioning

confidence: 99%

Rethinking budgetary slack as budget risk management

Elmassri

Harris

2011

Journal of Applied Accounting Research

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PurposeThe 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/approachA 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.FindingsThe 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/implicationsThe 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 implicationsIf 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/valueThe 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.

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Section: Introductionmentioning

confidence: 99%

Rethinking budgetary slack as budget risk management

Elmassri

Harris

2011

Journal of Applied Accounting Research

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“…Similarly, Mia (1987) revealed that participative budgeting fosters a positive attitude toward jobs. Additionally, Huang and Chen (2009) indicated that a more favourable attitude toward the budgeting process is positively correlated with a more favourable attitude toward budgetary slack, and as such, it leads to the reduction of the creation of budgetary slack. In line with the mentioned studies, the results of this study prove that when the managers participate more in the budgeting process, their attitude toward the budget attained is positive and as such, this leads to the reduction of the creation of budgetary slack.…”

Section: Discussionmentioning

confidence: 98%

“…Finally, this study contributes to the budgeting literature by implying the inclusion of the theory of planned behaviour to explain the significant relationship between the managers' attitude toward the budget attained and their creation of budgetary slack. Although prior budgeting studies have realised the crucial role of the managers' attitude related to their creation of budgetary slack (Huang & Chen 2009;Huang & Chen 2010;Wentzel 2004), very little research has recognised the potential of this theory in explaining this relationship. By extending the knowledge on the theory of planned behaviour as related to budgeting research, this study sheds lights on the psychological mechanism underlying the relationship between the managers' attitude and their creation of budgetary slack.…”

Section: Discussionmentioning

confidence: 99%

Budgetary Participation’s Antecedent of Information Asymmetry and its Outcomes

2019

AJAG

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The purpose of this study is to investigate the antecedents and outcomes of budgetary participation. More specifically, I propose that a lack of information fosters budgetary participation. A high degree of participation allows the managers to have a favourable attitude toward budget attained and in turn, this leads to a low degree of budgetary creation slack. The questionnaire data obtained from 115 Vietnamese managers was used to test the proposed model. The results suggest that highly asymmetric information demands high participative budgeting. When participating more in the budgeting process, the managers' attitude toward the budget attained was favourable, and in turn, this leads to the decrease of budgetary slack creation. These findings contribute to the budgeting literature in a threefold manner. First, this study supports the argument that the demand for participation is high when there is highly asymmetric information. Second, the results suggest that the managers' attitude toward the budget attained mediates the relationship between budgetary participation and the managers' creation of budgetary slack. Third, by using the theory of planned behaviour, this study has explained how and why a favourable attitude toward the budget attained leads to the low creation of budgetary slack.

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“…Penganggaran melibatkan bawahan untuk menetapkan dan mencapai target anggaran serta atasan sebagai pihak yang mengalokasikan sumber daya tersebut (Huang dan Chen 2009). Persiapan dan pelaksanaan dalam proses penganggaran dapat memberikan dampak yang signifikan pada sikap, perilaku, dan kinerja pihak-pihak yang terlibat didalamnya (Yuen 2004).…”

Section: Latar Belakangunclassified

Pengaruh Kejujuran Rekan Dan Penghargaan Non Moneter Pada Senjangan Anggaran

Rahmawati

2019

JAKI

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This study aims to examine the effect of peer honesty on the budgetary slack. This study focus on peer relations in the workplace as one of the factors that affecting budgetary slack.Non-monetary awards were also examined in their influence on the relationship. This is because many previous studies stated that non-monetary awards can strengthen or weaken performance. The data of this study were taken through independent variable manipulation experiments, namely peer honesty and non-monetary awards. This study used the experimental design 2 x 2 between subjects and ANOVA was used to analyze the data. The results of the study with 61 participants indicate that greater budgetary slack is due to the influence of dishonest colleagues than honest partners under conditions of information asymmetry. However, non-monetary awards do not affect the relationship between the two variables

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The Effect of Attitudes Towards the Budgetary Process on Attitudes Towards Budgetary Slack and Behaviors to Create Budgetary Slack

Cited by 8 publications

References 0 publications

Rethinking budgetary slack as budget risk management

Rethinking budgetary slack as budget risk management

Budgetary Participation’s Antecedent of Information Asymmetry and its Outcomes

Pengaruh Kejujuran Rekan Dan Penghargaan Non Moneter Pada Senjangan Anggaran

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