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Budget participation and informational asymmetry: a study in a multinational company

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Author Info

  • Carlos Eduardo Facin Lavarda

    (Universidade Regional de Blumenau – FURB)

  • Dalci Mendes Almeida

    (UNISUL/SC)

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    Abstract

    .The objective of this study is to verify the influence of budgetary participation on the reduction of information asymmetry in the budget process in a multinational company, having taken for granted that the participatory budget minimizes information asymmetry. Therefore, descriptive research was carried out, in the form of a case study and qualitative type, through interviews and direct observation. The study was applied in a business unit of a multinational company that has the consolidated budget practice. The results of the research show that the company has a participatory budget, for all sectors and managers are directly involved in its preparation. Moreover, several meetings are held to discuss and define the budget targets. However, in this study this condition did not minimize information asymmetry, as most responses focused on a single item, indicating that the sub-manager/subordinate has more information than his superior.

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    Bibliographic Info

    Article provided by Fucape Business School in its journal Brazilian Business Review.

    Volume (Year): 10 (2013)
    Issue (Month): 2 (June)
    Pages: 72-94

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    Handle: RePEc:bbz:fcpbbr:v:10:y:2013:i:2:p:72-94

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    Postal: Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES
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    Related research

    Keywords: Budgetary participation; informational asymmetry; agency theory.;

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    1. Shields, J. F. & Shields, M. D., 1998. "Antecedents of participative budgeting," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 49-76, January.
    2. Larissa Kyj & Robert J. Parker, 2008. "Antecedents of Budget Participation: Leadership Style, Information Asymmetry, and Evaluative Use of Budget," Abacus, Accounting Foundation, University of Sydney, vol. 44(4), pages 423-442.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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