Antecedents of Budget Participation: Leadership Style,Information Asymmetry,and Evaluative Use of Budget

This study explores the causes or antecedents of budget participation to understand more fully the role of participation in the workplace. The study focuses on the reasons why superiors encourage the budget participation of their subordinates and draws upon several theoretical perspectives including leadership theory, agency theory and organizational justice. To examine the issues, a survey was administered to managers and supervisors in several companies. Results of path analysis suggest that superiors encourage subordinate participation when the superior's leadership style is considerate. This implies that budget participation may mediate the relation between leadership style and work outcomes. Results also suggest that superiors encourage participation when budget goals are used in the performance evaluation of subordinates, in which case, the study argues, the superiors encourage participation because of concerns about organizational justice. This finding implies that budget participation may mediate the relation between the evaluative use of budget and those work outcomes that prior research has linked to organizational justice. The proposed relation between information asymmetry and budget participation is not supported.     

Testing a Model of Cognitive Budgetary Participation Processes in a Latent Variable Structural Equations Framework

Previous accounting research has suggested that subordinate participation in the budgetary process has two cognitive aspects: (1) participation enhances budget quality, and hence the utility of budgets, by allowing subordinates to introduce private knowledge into the budgetary process, and (2) participation enables subordinates to obtain information that is relevant to performing their jobs. This study tests a model that encompasses both cognitive aspects of budgetary participation. Data were gathered with a questionnaire distributed to managers from a variety of different national origins who were working in many different global locations. The data were analysed with latent variable structural equation modelling, which provides several advantages over more conventional analytic methods generally used in budgetary participation and other behavioural accounting research. The results indicated that participation enhances budget quality and that budget quality, in turn, has a positive effect on budget utility. Participation was also found to have a direct and positive effect on job-relevant information. The results failed to support a proposed indirect effect of participation on job-relevant information through the enhancement of budget quality.     

The influence of organizational culture on the usefulness of budget participation by Singaporean-Chinese managers

This paper uses Hofstede's cultural dimensions (Hofstede G.H , Culture's Consequences International Differences in Work Related Values, (Beverly Hills, CA: Sage 1980)) to examine whether differences in organizational culture between local and foreign manufacturing firms affect the usefulness of budgetary participation in a high power distance nation (Singapore). The results from interview and survey data analysis provide support for the hypothesis that power distance moderates the usefulness of participation in budget setting and performance evaluation at the organizational culture level in terms of decreased role ambiguity and enhanced superior/subordinate relationship.     

The effect of performance feedback on prior budgetary participative research using survey methodology: An empirical study

Prior research examining the relation between budgetary participation and job performance explicitly or implicitly posits budgetary participation and intervening variables such as role ambiguity, motivation, job satisfaction, and job-relevant information as independent variables; job performance as the dependent variable. However, these studies are often based on correlated data in which the direction of causation is unknown. This paper uses attribution theory to examine whether job performance affects perceptions of budgetary participation and/or intervening variables (e.g. role ambiguity). Using a laboratory experiment and multivariate analysis of variance (MANOVA), the findings of this study show that knowledge of performance, obtained through performance evaluations and/or external cues, affects individuals’ perceptions regarding budgetary participation, job satisfaction, role ambiguity, motivation, and job-relevant information. The results of the study may undermine correlations between self-reported data on individual characteristics (e.g. motivation) and performance data, as well as correlations between self-reported data on organizational variables (e.g. budgetary participation) and performance data. The study provides suggestions how researchers could overcome problems associated with causal directions in future budget participation studies that link self-reported individual and organizational characteristics to job performance.     

Budget-Emphasis in Performance Evaluation and Managers’ Job Related Tension: the Moderating Effect of Information Completeness

Research examining a budget-emphasis style of performance evaluation has led to insights about those situations where it is likely to increase a manager’s job related tension. However, less is known about how the management accountant can use the budget process to ameliorate this effect. This paper focuses on the part of the budget process where subordinate managers have to explain budget variances to their superiors and, in particular, the information subordinates have available to explain those variances. The paper argues that the completeness of this information affects subordinate managers’ ability to understand budget variances and explain them to their superiors which, in turn, affects subordinates’ level of job related tension, especially where superiors use a budget-emphasis style of performance evaluation. A cross-sectional study, using interview and questionnaire techniques, empirically tests, and finds support for, this hypothesis.     

The influence of voice and explanation on performance in a participative budgeting setting

This paper examines the relationship between the use of a fair budgeting process and subordinate performance. Organizational justice theory is used to define a fair budgeting process as having two components: the subordinate’s involvement in the budgeting process, voice; and the communication of a rationale for the subordinate’s lack of influence over the final budget target the superior sets, explanation. Results indicate significant performance improvements when voice and explanation are combined as compared to voice alone.     

NPM REFORMS AND THE PERCEPTION OF BUDGET BY HOSPITAL CLINICIANS: LESSONS FROM TWO CASE‐STUDIES

This paper investigates how clinicians perceive managerial budgeting and how this affects clinical practice. To this end, case‐studies were conducted involving two Italian public hospitals. The results show that clinicians' commitment to organizational objectives was strongly enhanced by the use of the budget as a means to evaluate and reward clinicians' performance. One of the main lessons learned from this study is that aligning existing institutions to organizational objectives is the only way forward for effective reform implementation. Consequently, the challenge for future reforms is to deal with the search of balance between efficiency goals and existing institutions.     

The effect of information asymmetry on negotiated budgets: an empirical investigation

This study examines three issues: (1) the effect of information asymmetry on the budget negotiation process, (2) the effect of information asymmetry on budgetary slack when budgets are set through a negotiation process, and (3) whether subordinates consider superiors imposing a budget following a failed negotiation as being low in procedural justice, which in turn causes low subordinate performance. The results suggest that smaller differences in initial negotiation positions do not indicate a higher likelihood of agreement when initial differences are due to differential information symmetry. Further, information asymmetry affects the relationship between negotiation agreement and budgetary slack. Last, inconsistent with a pure economic perspective, having superiors impose a budget after a failed negotiation causes justice or fairness considerations to demotivate subordinates.     

Alternative work arrangements and perceived career success: Current evidence from the big four firms in the US

This study examines the influences of alternative work arrangements (AWAs), subordinate gender, and supervisor attitudes and beliefs regarding AWAs on performance evaluation judgments in public accounting. One hundred and forty-two experienced professionals from two US Big Four firms evaluated a hypothetical subordinate’s performance in an experimental setting. Results indicated that subordinate gender and AWA participation were significantly related to supervisors’ perceptions of the subordinate’s career success. We also found that individual differences in supervisors’ attitudes and beliefs regarding AWAs were systematically related to their performance evaluation judgments, and indicate that cultural support for AWAs is not uniform among experienced Big Four professionals. Further, the association between these attitudes and beliefs and performance evaluation judgments are consistent with an organizational justice interpretation of AWA use. Implications of these results for the Big Four’s work-life balance initiatives in the US are discussed.     

The propensity of managers to create budgetary slack: A cross-national re-examination using random sampling

Following a review of the slack literature, Merchant (1985a) proposed that the propensity of subordinate managers to create slack is positively related to the importance placed on meeting budget targets, negatively related to the extent of participation allowed in budgeting processes, negatively related to the degree of predictability in the production processes, and negatively related to their superiors' abilities to detect slack. The results of his empirical tests provided little overall support for these hypotheses. The mixed nature of his results is of some concern since the literature provides considerable support for the theoretical framework underlying his propositions. He concluded that his use of non-random sampling may have influenced the results of his study. The objectives of this paper are first to extend Merchant's (1985a) study using the same measures but employing random sampling in a cross-national setting to enhance result generalizability. Second to assess whether the ability of superiors to detect slack interacts with budgetary participation to affect a subordinate manager's propensity to create slack. The results provide support for the cross-national generalizability of all five hypotheses.     

Budget Type and Performance — The Moderating Effect of Uncertainty

Calls for improvements to traditional yearly corporate budgeting practices have a common thread, the failure of these practices to provide adequate plans in uncertain environments. Rolling budgets that require continuously updated forecasts have been suggested as a means to improve the traditional budget process. We hypothesise that when the environment is highly uncertain, learning effects from rolling forecasting result in superior performance. In the same environment, traditional budgeting results in poorer performance because there is no systematic method for exploring and understanding environmental uncertainty. Alternatively, rolling forecasting causes inferior performance in low uncertainty conditions because commitment to the budget goal is more important than the benefits of learning from forecasting.     

Organization size, budget cycle, and budget related influence in city governments: An empirical study

This paper explores the relationship between budgeting and perceived power in city government organizations. Data are reported from a survey of perceived budget influence in six city governments in Texas. The findings suggest that perceived influence varies by stage of budget cycle, city size, level of hierarchy, department function, and vertical vs horizontal direction of influence. For example, during budget formulation city managers were perceived as having the most vertical power. During budget implemetation, there was a perceived increase in department head vertical power and a decrease in city council power. Perceptions of horizontal power suggested that budget departments generally had greater perceived influence than operating departments for budget formulation, but not for budget implementation. The findings are used to develop a strategic contingencies model of budget-related power, and to suggest some research steps for testing the proposed model.     

Ritual legitimation, de-coupling and the budgetary process: managing organizational hypocrisies in a multinational company

The study of participation in the budgetary cycle has formed a prominent part of the research literature concerned with the budgetary process. More recently there has emerged a body of literature concerned with exploring the political and symbolic nature of the budgetary process. The paper reports upon the outcomes of an empirical study of the introduction of `budgetary participation' in a division of a European subsidiary of a large North American car manufacturer. We detail the long process of consultation and negotiation within the subsidiary, and between it and the European Headquarters. The study provides a revealing instance of the roles of formal budget participation as a ritual of control and legitimation without the substantive involvement of middle managers and suggested to us the introduction of de-coupling and organizational hypocrisy alongside the introduction of budget participation. The study pays close attention to the contingent effects of the wider political context of the division and the relationships between the division, its organizational context and organizational environment, and how this context played upon the budgetary process in the division. The outcomes that we analyse at `Delta' reflect the de-coupling strategies and organizational hypocrisies commonly found in public sector organizations. In this wider setting the corporation persists with the ritual of `tight' budget negotiation and target setting and apparent underachievement in performance. Yet we conclude that the complex technological and political context to the formation and siting of Delta continued and may continue to support its existence.$g0     

Budget negotiations in multi-period settings

Budgets are typically set through a negotiation process that is repeated in successive periods, often between the same superior and subordinate. Despite this, little is known about budget negotiations in multi-period settings. Temporal interdependence is a fundamental aspect of budget negotiations in multi-period settings, and it refers to the fact that in multi-period budget settings, superiors’ (subordinates’) decisions and actions in one period can be influenced by subordinates’ (superiors’) decisions and actions in earlier periods and, in turn, can influence subordinates’ (superiors’) decisions and actions in later periods. We report the results of an experiment that addresses two issues related to temporal interdependence.     

基于组织结构的高校绩效预算考评体系构建

针对当前高校绩效预算管理研究中存在的考评责任主体不明确问题,论文试以高校组织结构为平台,以构建一个闭环的高校预算绩效考评体系为目标,分别从建立高校绩效预算评价体系,构建高校绩效预算考评指标,制定与考评结果相配套的促进机制三个方面对基于组织结构的高校绩效预算考评体系进行了研究.     

The role of attribution theory in control systems

In this paper we develop a revised model of the management control process in light of attribution theory. Attribution theory describes how people seek and use information to structure and to control their social environment. We examine how and why people cognitively interact with feedback information contained in performance reports in making expectancy and variance investigation decisions. We also discuss conflicts that a superior and a subordinate may have due to different attributions used to explain behavior.     

The Effects of Participation and Job-Relevant Information on the Relationship Between Evaluative Style and Job Satisfaction

This study investigates the intervening effects of budgetary participation and job-relevant information on the relationship between budget emphasis and job satisfaction. It proposes that budgetary participation and job-relevant information are endogenous to budget emphasis. Using the path analytical technique and based on a sample of 152 senior managers, the study found that budget emphasis has an insignificant direct effect on job satisfaction, but a strong indirect effect through job-relevant information and budgetary participation. The results also indicate that job-relevant information has an intervening effect on the relationship between participation and job satisfaction.     

The effect of participative budgeting on job satisfaction and performance: Role ambiguity as an intervening variable

The results of studies into the effects of participative budgeting have been equivocal. This study seeks to explain the process by which participation in budget setting affects managers' performance and job satisfaction. A model is developed to show how role ambiguity acts as an intervening variable in the link between participation and outcome criteria. Empirical results indicate that budgetary participation acts indirectly, via role ambiguity, to influence job satisfaction and performance.     

Budget emphasis, budgetary participation and managerial performance: A note

Ongoing research into the impact of budget emphasis on the relationship between participation and managerial performance has failed to provide consistent results. The purpose of this study was to conduct a replication of this two-way interaction model, drawing on data from a range of organizations in order to promote result generalizability and to test whether the model fits the data. It is proposed that a potential reason for why the results of this study conflict with those of prior research is that their findings were based on non-random sampling.