Canadian Provincial Budget Outcomes: A Long–run and Short–run Perspective

This paper tests a theory of public budgeting as a long–run and short–run process. In this model, political decision makers strive to achieve budgetary balance over the long–run but are constrained in the short–run and follow incremental decision–making. First, the budget equilibrium theory is elaborated upon and is used to explain the relationship between revenues, expenditures, and debt along with control variables one being provincial general elections. Second, the interaction between these variables is tested with a vector error correction model for each of the Canadian provinces using annual data between 1961 and 2000. The results show that in the long–run the driving force of provincial budgeting was expenditure control initiatives in seven of the ten provinces. In the short–run, incrementalism occurred in all of the provinces and a political business cycle was evident in six provinces.     

Budgeting in Catholic Parishes: An Exploratory Study

In this paper an aspect of accounting, namely budgeting, has been studied in an organizational context. According to Booth (1993) churches represent 'extreme cases' in which to study the impact of accounting. Following on from Laughlin (1988) Booth considered the sacred and secular divide to be a significant element in the use of accounting by church organizations. The parishes of the Catholic Archdiocese of Melbourne form the context of this study in which evidence is sought for the sacred and secular divide by studying the role of budgeting in the parish. Questions were asked regarding participation in the budgetary process and the development and use of the budget. It was found that there was little consultation or participation in the budgetary process and that the use of the budget was restricted. These findings suggest that the sacred and secular divide operates at the parish level.     

Budgetary Reforms in the Non-profit Sector: A Comparative Analysis of Experiences in Health Care and Higher Education in the Netherlands

This study reports on budgetary reforms in the Dutch health care and higher education sector in the last twenty years. Comparisons between the two sectors reveal that not all reforms adhere to the principles of New Public Management. New budget systems in both sectors are mixed systems, with university budgets developing from input to more output based systems and hospital budgeting systems from output to more input oriented systems. More output-based budget systems appear to stimulate production, contradicting government's policy of cost reduction. The most effective reform measures turn out to be those who are best aligned with opinions and attitudes of medical and academic professionals.     

In which direction is budgeting moving? A report in large firms of Spain

In this paper we provide evidence on the budgetary practice of 135 large firms located in Spain. The results have allowed us to evaluate a wide range of weakness attributed to the traditional budgeting approach, still called into question, as well as to discern towards what emerging paradigm budget is aligned the practice analyzed. Evidence shows that the budgetary approach used by the firms have managed to resolve many of the weakness imputed to the traditional budgeting. At the same time, we note that in the most of the cases studied these procedures are in line with the conceptual ideas defended by the Better Budgeting.     

Budget Rules and Flexibility in the Public Sector: Towards a Taxonomy

The practices and norms of public budgeting have often been seen as a brake on the flexibility needed of government organisations. This remains true despite historically significant financial management reforms designed around budgetary devolution. Seeing flexibility as operating along two dimensions – devolution and discretion – this paper revisits the underlying features of traditional public budgeting to develop a taxonomy of six generic ‘budget rules’. By isolating key properties of budget control, the paper uses two of the more prominent rules – annuality and purpose – to illustrate how the rules interact to generate control capacity, as well as the scope for rule variability in promoting increased flexibility.     

French revolution and German circumspection: reforming budgeting and accounting in national governments

In France in 2001, a revolutionary budgeting and accounting reform of the central government was begun and, in 2006, introduced—it is now almost complete. In 2006, the German federal government began a similarly revolutionary budgeting and accounting reform, but abandoned it in 2010. We identify the similarities in technique between the two countries' reforms but also significant differences. The authors conclude that, notwithstanding the importance of accrual accounting in the French revolution and in the abortive German revolution, the resilience of the traditional budgetary accounting systems is striking.     

Coping with ambiguity through the budget: the positive effects of budgetary targets on managers' budgeting behaviours

Much consideration has been given over the years to what may be described as the `negative' aspect of budgeting; that budgets may constrain innovation and learning, and that budgetary pressure may lead to unintended behavioural side effects. In contrast to this, the present study examines the extent to which budgets have a more positive, `comforting' role to play in the individual's work experiences. We argue that managers confronted with uncertainties associated with role ambiguity may respond by becoming positively committed to achieving budgetary targets as budgets offer a source of structure and certainty. We find that the use of budgets as an antidote to role ambiguity is a powerful influence on the manager's budgeting behaviour. We test the strength of this effect and we find that budgetary commitment brought on by the experience of role ambiguity may over-ride the potential for recognised explanatory variables such as leadership style, the expectations of the superior, and occupational socialisation, to inform managers' budgeting behaviours in these circumstances. Budgets, it seems, may be as useful to the individual as they are problematic.     

Modernity, Modernization and the Deinstitutionalization of Incremental Budgeting in Local Government

Governmental reform programs in the UK have a long history of failed attempts to end incrementalism in local government budgeting. Drawing on structuration theory, incrementalism is presented as institutionalized organizational behaviour. From this perspective, the recent New Labour reform agenda may be interpreted via a theory of de‐institutionalization. The approach is illustrated through an analysis of recent developments in a large UK metropolitan authority where new political structures, inspection regimes and regulatory pressures are beginning to challenge incrementalism. A new belief in the measurability of public sector performance seems to be legitimized by a post‐bureaucratic modernity rather than any significant technical innovations.     

Capital Structure, Information Acquisition and Investment Decisions in an Industry Framework

This paper analyzes the relationship between a firm's capital structure and its information acquisition prior to capital budgeting decisions. It is found that low-growth industries can sustain a large number of levered firms. In these industries, leverage is negatively related to a firm's incentive to acquire information during the capital budgeting process. In contrast, high-growth industries only sustain a small number of levered firms. In these industries, levered firms acquire more information than all-equity financed firms. The model yields empirical predictions regarding the effects of leverage on the expected amount and the volatility of corporate investment. While leverage does not affect firm value, highly levered firms generate a more volatile cash flow than firms with low debt levels.     

Budgeting and Strategy in Schools: The Elusive Link

This paper examines the effects upon management control in schools following the assumption of responsibility for delegated budgets required by the Education Reform Act (ERA) 1988. The paper examines the process of construction, approval and amendment of school budgets drawing on a neo-institutionalist framework. Our investigation has drawn upon extensive interviews in 17 schools in three North West local authorities, supplemented by a postal questionnaire and inspection of relevant documents. We develop two main arguments. First, in order to satisfy their statutory duties LEAs supervised the introduction of internal systems of budgetary control and school development planning in schools. Thus, control procedures were largely designed by internal auditors, who sought to provide an audit trail and to ensure financial probity mainly to satisfy external legitimacy, rather than to influence internal decision-making. Second, the specific nature of the relationship between budgeting and strategy varies between schools as the extent of formalised planning differs, but in general there is a very loose coupling between strategic objectives and budget expenditures.     

Traditional and emergent theories of budgeting: An empirical analysis

This paper examines the usefulness of both traditional and emergent budgeting theories to understanding budget-related behavior in a state geriatic system. The authors used an action-research methodology to acquire evidence. They conclude that the traditional and emergent theories offer differing insights into budgetary behavior and suffer from different shortcomings. Implications for researchers and practitioners are explored.     

中国公共预算改革的目标选择:近期目标与远期目标

本文运用凯顿的预算模式理论研究了中国公共预算改革的目标选择主要结论是,中国现阶段仍然应该以建立一种"控制取向"的现代公共预算体制为目标,中国预算改革的当务之急是将政治控制与行政控制纳入预算过程.最后,虽然新绩效预算是一种非常理想的预算模式,但是,中国目前并不具备实行的条件.即使对于实行新绩效预算来说,先实行一种"控制取向"的预算体制也是有帮助的.     

Multinationals do it better: Evidence on the efficiency of corporations' capital budgeting

With U.S. multinational enterprises playing increasingly important roles in the global economy, it is important to understand the efficiency of their capital budgeting decisions. We examine an unbalanced panel of 332 U.S. firms from 1992–2000. Using the deviation of a firm's estimated marginal Tobin's q from a benchmark as an indicator of effective resource allocation, we find that widespread multinationals make more efficient capital budgeting decisions. We also test whether this reflects the MNEs' investment locations, but do not obtain support for the hypotheses that they might be monitored by more agents or more successfully resist pressures from interest groups and governments.     

关于绩效预算与零基预算相结合的预算方法体系的思考

零基预算作为一种有效的财政预算编制模式,在许多西方发达国家得到广泛应用.近几年我国也开始试行零基预算,取得了一定成效,但也存在很多不足.本文首先论述了零基预算编制模式以及它在我国实践当中所面临的问题;接着阐述了绩效预算的涵义及其优势;最后指出建立以零基预算与绩效预算相结合的预算方法体系,对零基预算在我国的运行以及发挥财政预算的控制、评估、监督作用具有重要意义.     

Risk adjusted discount rates and the present value of risky costs

In capital budgeting the correct risk adjusted discount rate for future cash flows is independent of whether the flow is a cost or a revenue. Contrary to a widely disseminated view in some popular textbooks and elsewhere, costs are not especially safe (nor risky), and accordingly costs should not be discounted at especially low risk adjusted discount rates. This paper analyzes capital budgeting within a portfolio model in which revenues and costs appear as “long’ and “short’ portfolio positions, respectively, and proves that costs are neither more nor less intrinsically risky than revenues.     

Testing contingency hypotheses in budgetary research: an evaluation of the use of moderated regression analysis

In the contingency literature on the behavioral and organizational effects of budgeting, use of the Moderated Regression Analysis (MRA) technique is prevalent. This technique is used to test contingency hypotheses that predict interaction effects between budgetary and contextual variables. This paper critically evaluates the application of this technique in budgetary research over the last two decades. The results of the analysis indicate that the use and interpretation of MRA often do not conform to proper methodology and theory. The paper further demonstrates that these problems seriously affect the interpretability and conclusions of individual budgetary research papers, and may also affect the budgetary research paradigm as a whole.     

Managing budget emphasis through the explicit design of conditional budgetary slack

Budgetary slack plays an important role in the functioning of budgets in organizations. While theory has found negative as well as positive elements associated with its presence, the empirical literature has interpreted it as being dysfunctional to organizations. In this paper, we present empirical evidence on how a company purposefully budgeted additional financial resources with a motivation intention (Lukka. Budgetary biasing in organizations: Theoretical framework and empirical evidence. Accounting, Organizations and Society 13 (1998) 281–302) to facilitate the managers’ task in achieving the goals of the company. Using quantitative and qualitative data from four logistic sites of a disk drive manufacturer for 24 months, we examine how the company accepted more slack as the demand on business processes increased and goals other than budget targets––in particular, service quality––became harder to achieve. By allowing this practice, headquarters made it clear to local managers that product quality and service were at least as important as meeting budget objectives. We also find that not only was budgetary slack purposefully built during the budgeting process but also in the budgeting system itself through the underlying cost accounting assumptions. The results of this paper provide empirical evidence on the positive aspects of budgetary slack and on the role of cost accounting models used in the budgeting system to facilitate managerial work.     

新绩效预算理论在高校预算中的运用

传统的绩效预算强调预算支出所导致的产出，新绩效预算则关注支出的最终结果。高校预算管理工作应以目标管理和部门预算为支柱，以畅通的信息传导与反馈渠道为保障，以协调发展的内生制度与外生制度为条件，构建效益分析框架和绩效预算管理的运行模式。     

Relationships among budgetary leadership behavior, managerial budgeting games, and budgetary attitudes: Evidence from Taiwanese corporations

In this paper, we examine the relationship among leadership behavior (contingent reward vs. contingent punishment), managerial budgeting games (devious games vs. economic games), and attitudes towards the budgetary process. Relationships were tested using a structural equation model that was estimated on the basis of questionnaire data from 216 Taiwanese managers. The majority of respondents were accounting/finance managers employed by manufacturing firms. Results reveal that contingent-reward leadership behavior has a direct and positive effect on attitudes toward the budgetary process, and an indirect effect through economic games. On the other hand, we find evidence that contingent-punishment leadership behavior has only an indirect and negative effect on attitudes toward the budgetary process through devious games, especially for non-accounting/finance managers. Managers who play economic games tend to have positive attitudes towards the budgetary process, while those who play devious games do not. The findings should be useful to management in understanding what effective leadership behavior is in the budget-preparation process in Taiwan, and assessing how budgeting games are likely to be adopted by Taiwanese managers.     

Payback without apology

When interest rates are uncertain, the net‐present‐value threshold required to justify an irreversible investment is increasing in the length of a project's payback period. Therefore, slow‐payback projects should face a higher hurdle than fast‐payback projects, just as investment folklore suggests. This result suggests that the widely disparaged use of payback for capital budgeting purposes can be an intuitive response to correctly perceived costs and benefits.