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Published in: Journal of Management Control 2/2018

01-06-2018 | Original Paper

Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature

Authors: Christian Daumoser, Bernhard Hirsch, Matthias Sohn

Published in: Journal of Management Control | Issue 2/2018

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Abstract

Budgetary slack is a heavily researched topic in the field of management accounting, but the heterogeneous nature of prior research blurs our understanding of this important topic. In this paper, we provide a structured overview of research on budgetary slack published in top-tier accounting and business ethics journals and reach the following conclusions: Participative budgeting can create or reduce budgetary slack. Less slack is created under truth-inducing pay schemes compared to slack-inducing schemes. Additionally, slack creation is affected by budget users’ risk attitudes and information asymmetry. Information asymmetry increases budgetary slack, but that effect is influenced by multiple factors, including budgetary participation and information systems. Fairness and reputation concerns decrease budgetary slack, but ethics concerns do not. Finally, the analysis revealed that social norms decrease slack and peer influence moderates the effect. We show that research in this field focuses mainly on psychological perspectives to analyse individuals’ budget-related behaviour. Experimental research was determined to be the most frequently used research method. An analysis of current experiments shows growing numbers of investigations of budgetary slack as a proxy of honesty in managerial reporting.

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Appendix
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Footnotes
1
Within these journals, we searched for “slack”, “budget slack”, “budgetary slack”, “honesty”, and “honest reporting”.
 
2
The sample was determined in June 2014 and updated in January 2018.
 
3
Analytical, archival, experimental, and survey-based studies are easily distinguishable. Field studies and archival research differ based on the manner in which archival work is a part of field studies. Framework-based studies differ from reviews based on the development of new perspectives, whereas review articles mainly serve to structure the previous literature (Hesford et al. 2007).
 
4
The articles are ordered alphabetically to offer a reference book setting for research methods and samples.
 
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Metadata
Title
Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature
Authors
Christian Daumoser
Bernhard Hirsch
Matthias Sohn
Publication date
01-06-2018
Publisher
Springer Berlin Heidelberg
Published in
Journal of Management Control / Issue 2/2018
Print ISSN: 2191-4761
Electronic ISSN: 2191-477X
DOI
https://doi.org/10.1007/s00187-018-0267-z

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