The incidence of budgetary slack: a field study exploration

Abstract

Extends the investigation into the nature of the relation between participative budgeting and budgetary slack. The literature focusing on this association can be divided into two groups, the conclusions of which are inconsistent with one another. One camp argues that managers intentionally use participation to create slack, while the other argues that managers, through anticipation, reduce slack in their budgets. In attempting to reconcile these differences, it has been suggested that superiors’ evaluative styles and information asymmetry are two factors which may influence this relation. The mechanism, however, by which they may exert an influence is unclear, since the cross‐sectional evidence also conflicts regarding the nature of the impact of evaluative style and information asymmetry on the association between participation and slack. A field study was conducted to allow an in‐depth analysis to be made. The study proposes that the association between participation and slack arises from a complex process of interactions between the parties involved. Although managers were aware that participation provided them with the opportunity to build slack into their budgets, they did not necessarily attempt to do so for reasons that include moral, ethical and career advancement considerations.

Citation

Dunk, A.S. and Perera, H. (1997), "The incidence of budgetary slack: a field study exploration", Accounting, Auditing & Accountability Journal, Vol. 10 No. 5, pp. 649-664. https://doi.org/10.1108/09513579710367935