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The Effect of Leader Reward and Punishment Behaviors on Subordinates’ Budget Reports

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  • Mien-Ling Chen

Abstract

In this study an experiment was conducted to examine the effect of leader reward and punishment behaviors on subordinates’ budget reports, especially at different levels of reward/punishment. The results indicated that hands-off behavior is the least effective in controlling budgetary slack among four leader behaviors, even if intrinsic honesty is effective in slack reduction. Large punishments relative to slack creation (the difference between budget requests and needs) can change subordinates from the possible slack creation to reasonable cost reporting, whereas with small punishments subordinates become less cooperative. Rewards have only a small effect, whereas adding punishments to rewards has a profound effect on slack reduction.

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  • Mien-Ling Chen, 2012. "The Effect of Leader Reward and Punishment Behaviors on Subordinates’ Budget Reports," The Engineering Economist, Taylor & Francis Journals, vol. 57(1), pages 41-54.
    • Handle: RePEc:taf:uteexx:v:57:y:2012:i:1:p:41-54
    DOI: 10.1080/0013791X.2011.650839
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    Cited by:

    1. Pamela R. Murphy & Michael Wynes & Till‐Arne Hahn & Patricia G. Devine, 2020. "Why Are People Honest? Internal and External Motivations to Report Honestly†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 945-981, June.

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