Uncertainty and budgets: an empirical investigation

Niels Sandalgaard

doi:10.1108/17465261211272157

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Baltic Journal of Management

ISSN: 1746-5265

Online from: 2006

Subject Area: Regional Management Studies

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Uncertainty and budgets: an empirical investigation

Document Information:
Title:	Uncertainty and budgets: an empirical investigation
Author(s):	Niels Sandalgaard, (Department of Business and Management, Aalborg University, Aalborg Oest, Denmark)
Citation:	Niels Sandalgaard, (2012) "Uncertainty and budgets: an empirical investigation", Baltic Journal of Management, Vol. 7 Iss: 4, pp.397 - 415
Keywords:	Beyond budgeting, Budgetary control, Denmark, Forecasting, Large enterprises, Perceived environmental uncertainty, Relative performance evaluation, Rolling forecast, Traditional annual budget
Article type:	Research paper
DOI:	10.1108/17465261211272157 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	This paper is based on a chapter of the author's PhD dissertation completed in June, 2010. The author gratefully acknowledges the helpful comments from Christian Ax, Per Nikolaj Bukh and Viggo Høst as well as from participants at the 4th ENROAC Summer School (Siena, July 2008; Discussant Wim Van der Stede), the 9th MAR conference (Münster, June 2009; Discussant Klaus Derfuss) and workshops at Copenhagen Business School and Aarhus School of Business. The author also wishes to thank Anita Vang and Vibeke Jørgensen for language help and the two anonymous reviewers for their helpful comments.
Abstract:	Purpose – The purpose of the paper is to report the findings of a study of the relation between perceived environmental uncertainty and the abandonment of traditional annual budgets. Design/methodology/approach – The paper is based on the use of data from a survey among the largest Danish companies. The hypothesized relationships are tested by the use of logistic regression. Findings – The results show no sign of a relationship between perceived environmental uncertainty and the abandonment of traditional annual budgets. Instead, the results show a positive relationship between competition in the environment and the adoption of rolling forecasts. Research limitations/implications – Instead of focusing on the budgeting system in isolation, future research should, to a larger extent, focus on management control systems as a package. Practical implications – The results indicate that a competitive environment could be handled by retaining budgets but supplementing them with rolling forecasts. Originality/value – This paper is among the first to investigate the relationship between environmental uncertainty and the abandonment of traditional annual budgets.