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

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  • Larissa Kyj
  • Robert J. Parker

Abstract

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.

Suggested Citation

  • 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, December.
  • Handle: RePEc:bla:abacus:v:44:y:2008:i:4:p:423-442
    DOI: 10.1111/j.1467-6281.2008.00270.x
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    References listed on IDEAS

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    Cited by:

    1. Martin Hiebl, 2014. "Upper echelons theory in management accounting and control research," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(3), pages 223-240, January.
    2. Khalid Hasan Al Jasimee & Francisco Javier Blanco-Encomienda, 2023. "A SEM-NCA approach towards the impact of participative budgeting on budgetary slack and managerial performance: The mediating role of leadership style and leader-member exchange," Papers 2310.09993, arXiv.org.
    3. Ibrahim Bader Alharbi & Rossilah Jamil & Nik Hasnaa Nik Mahmood & Awaluddin Mohamed Shaharoun, 2023. "Transformational Leadership’s Impact on Organizational Innovation: The Mediating Role of Management Control System," Global Business Review, International Management Institute, vol. 24(6), pages 1418-1433, December.
    4. Domenico Raucci & Manuela Paolini, 2022. "Informazioni budgetarie e prospettive di Behavioral Management Accounting nelle aziende sanitarie pubbliche italiane," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2), pages 117-139.
    5. Christian Kleine & Barbara Weißenberger, 2014. "Leadership impact on organizational commitment: the mediating role of management control systems choice," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(3), pages 241-266, January.
    6. Stephan Kramer & Frank Hartmann, 2014. "How Top-down and Bottom-up Budgeting Affect Budget Slack and Performance through Social and Economic Exchange," Abacus, Accounting Foundation, University of Sydney, vol. 50(3), pages 314-340, September.
    7. Lau, Chong M. & Scully, Glennda & Lee, Alina, 2018. "The effects of organizational politics on employee motivations to participate in target setting and employee budgetary participation," Journal of Business Research, Elsevier, vol. 90(C), pages 247-259.
    8. Micheli Aparecida Lunardi, 2019. "Relationship between leadership style, encouragement of budgetary participation and budgetary participation," Estudios Gerenciales, Universidad Icesi, vol. 35(150), pages 27-37, March.
    9. Stefan Hofmann & Andreas Wald & Ronald Gleich, 2012. "Determinants and effects of the diagnostic and interactive use of control systems: an empirical analysis on the use of budgets," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(3), pages 153-182, December.
    10. Klaus Derfuss, 2015. "Relating Context Variables to Participative Budgeting and Evaluative Use of Performance Measures: A Meta-analysis," Abacus, Accounting Foundation, University of Sydney, vol. 51(2), pages 238-278, June.
    11. Carlos Eduardo Facin Lavarda & Dalci Mendes Almeida, 2013. "Budget participation and informational asymmetry: a study in a multinational company," Brazilian Business Review, Fucape Business School, vol. 10(2), pages 72-94, June.

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