Abstract
Budgets are important for owners and management in planning, controlling and serving as the basis for measuring performance. In the budgeting process, management often acts unethically, such as making budgetary slack and manipulating data. This study analyzes the direct and indirect relationship between budget participation and budgetary slack. Questionnaires were distributed to 74 respondents who work as supervisors or managers in the hospitality industry in the city of Bandung, West Java, Indonesia. The data is processed using a SEM with the help of Smart-Partial Least Square software with structural models and measurement models. This study shows that budget participation has a positive relationship with procedural fairness and distributive fairness. In addition, budget participation, procedural fairness and distributive fairness has a negative relationship with budgetary slack. Moreover, procedural fairness and distributive fairness mediate the relationship between budget participation and budget slack. This study supports the theory of budget participation and budgetary slack and has implications for budgeting practice. Hence, in the process of preparing the budget, it is very important to involve subordinates because it can reduce budgetary slack.
Keywords: Budget Participation, Procedural Fariness, Distributive Fairness, Budgetary Slack
References
Afianti, A. F., & Megasari, C. (2022). Financial and Cost Management Strategies for Hotel Operations With Public Sector Accounting (Case Study of Enhaii Hotel Bandung). Journal of Hotel Service Management Academy of Indonesian Hotel Management Community, 6(2), 341–348.
Arifin, J. (2017). Akuntansi Sektor Publik. Universitas Islam Indonesia.
Arnold, M., & Artz, M. (2018). The use of a single budget or separate budgets for planning and performance evaluation. Accounting, Organizations and Society, 50–67.
Chibili, M. . (2017). Basic Management Accounting for the Hospitality Industry (N. U. bv Groningen/Houten (ed.); 2nd ed.).
Chong, V. K., & Strauss, R. (2017). Participative Budgeting: the Effects of Budget Emphasis, Information Asymmetry and Procedural Justice on Slack – Additional Evidence. Asia-Pacific Management Accounting Journal, 12(1), 181–220.
Dakhli, A. (2021). Corporate Budget Governance Through The Operating Managers Engagement : Does Locus Of Control Matter? Corporate Board: Role, Duties and Composition, 17(1), 39–50. https://doi.org/10.22495/cbv17i1art4
David, D. A. (2021). Organizational Justice and Organizational Change. Routledge.
Devie, Suralim, G., Tarigan, J., & Hatane, S. E. (2018). Linking Budgetary Participation to Budgetary Slack: An Indonesia Perspective. International Journal of Engineering & Technology, 7(4.38), 837–841.
Dopson, L. R., & Hayes, D. K. (2017). Managerial Accounting for the Hospitality Industry.
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting 17 th edition. In McGraw-Hill Education.
Greenberg, J. (1990). Organizational Justice: Yesterday, Today, and Tomorrow. Journal of Management, 16(2), 399–432.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2014). A Primer on Partial Least Squares Structural Equation Modeling. In Sage Publication.
Huseno, T. (2017). Organization Commitment and Environmental Uncertainty Moderating Budget Participation on Budgetary Slack. Jurnal Aplikasi Manajemen, 15(1), 106–115.
Kinnersley, R. L., & Magner, N. R. (2008). Fair Governmental Budgetary Procedures: Insights From Past Research and Implication for the Future. Journal of Public Budgeting, Accounting & Financial Management, 20(3), 355–374.
Klein, L., Beuren, I. M., & Dal Vesco, D. (2019). Effects of the management control system in unethical behaviors. RAUSP Management Journal, 54(1), 54–76.
Kohlmeyer, J. M., Mahenthiran, S., Sincich, T., & Parker, R. J. (2014). Leadership, Budget Participation, Budgetary Fairness, and Organizational Commitment. Advances in Accounting Behavioral Research, 17, 95–118.
Langevin, P., & Mendoza, C. (2013). How can management control system fairness reduce managers’ unethical behaviours? European Management Journal, 31(3), 209–222.
Leventhal, G. S. (1980). What Should Be Done with Equity Theory? New Approaches to the Study of Fairness In Social Relationships. Social Exchange, 27–55.
Lind, E. A., & Tyler, T. R. (1988). The Social Psychology of Procedural Justice. In Springer Science+Business Media, LLC.
Little, H. T., Magner, N. R., & Welker, R. B. (2002). The Fairness of Formal Budgetary Procedures and Their Enactment. Group & Organization Management, 27(2), 209–225.
Magner, N., & Johnson, G. G. (1995). Municipal Officials’ Reactions To Justice in Budgetary Resource Allocation. Public Administration Quarterly, 18(4), 439–456.
Mahmudah, H. (2016). Budgetary Fairness dan Kesenjangan Anggaran di Pemerintah Daerah Bangka Barat. JRAK: Jurnal Riset Akuntansi & Komputerisasi, 7(1), 56–64.
Maiga, A. S., & Jacobs, F. A. (2007). Budget Participation’s Influence on Budget Slack: The Role of Fairness Perceptions, Trust and Goal Commitment. Jamar, Vol. 5(1), 39–58.
Mowen, M. M., Hansen, D. R., & Heitger, D. L. (2018). Managerial Accounting : The Cornerstone of Business Decision Making. In Cengage Learning (Vol. 17).
Nguyen, N. P., Evangelista, F., & Kieu, T. A. (2019). The contingent roles of perceived budget fairness, budget goal commitment and vertical information sharing in driving work performance. Journal of Asian Business and Economic Studies, 26(1), 98–116.
Nouri, H., & Parker, R. J. (1998). The relationship between budget participation and job performance: The roles of budget adequacy and organizational commitment. Accounting, Organizations and Society, 23(5–6), 467–483.
Onsi, M. (1973). Factor Analysis of Behavioral Variables Affecting Budgetary Slack. The Accounting Review, 48(3), 535–548.
Osikhena, K., & ODIA, J. (2013). Relationship between Budget Participation, Budget Procedural Fairness, Organisational Commitment and Managerial Performance. Review of Public Administration and Management, 2(3), 234–250.
Ozer, G., & Yilmaz, E. (2011). Effects of Procedural Justice Perception , Budgetary Control Effectiveness and Ethical Work Climate on Propensity to Create Budgetary Slack. Business and Economics Research Journal, 2(4), 1–18.
Said, D., Junaid, A., Ahmad, H., & Muslim. (2023). Pengaruh Ideologi Etik dan Kecerdasan Spiritual Terhadap Hubungan Antara Partisipasi dan Senjangan Anggaran. Riset & Jurnal Akuntansi, 7(1), 787–798.
Schmitz, S. O. (2020). The Future of Management Control is Fair: A New Perspective on Beyond Budgeting as Promoter of Trust and Ethical Behavior.
Schoute, M., & Wiersma, E. (2011). The relationship between purposes of budget use and budgetary slack. In Advances in Management Accounting (Vol. 19). Emerald.
Setin, S., Sembel, R., Sudibyo, Y. A., & Purwanti, A. (2021). Roles of Fairness in the Relationship between Performance Evaluation Systems and Budget Gaming Behavior. Jurnal Pengurusan, 62.
Sheng, S. (2019). Literature Review on the Budget Slack. Advances in Economics, Business and Management Research, 96, 206–209.
Staley, A. B., & Magner, N. R. (2007). Budgetary Fairness, Supervisory Trust, and The Propensity To Create Budgetary Slack: Testing a Social Exhange Moden in a Government Budgeting Context. Advances in Accounting Behavioral Research, 10(2007), 159–182.
Steed, E., & Gu, Z. (2009). Hotel management company forecasting and budgeting practices: A survey-based analysis. International Journal of Contemporary Hospitality Management, 21(6), 676–697. https://doi.org/10.1108/09596110910975954
Wafiroh, N. L., Abdani, F., & Nurdin, F. (2020). Budget Participation and Budgetary Slack: The Mediating Effect of Autonomous Budget Motivation. Jurnal Akuntansi, 10(3), 287–300.
Warren, C. S., & Tayler, W. B. (2020). Managerial Accounting. In 8 Cengage Learning.
Wentzel, K. (2002). The Influence of Fairness Perceptions and Goal Commitment on Managers’ Performance in a Budget Setting. Behavioral Research in Accounting, 14(1), 247–271.
Wentzel, K. (2004). Do Perceptions of Fairness Mitigate Managers’ Use of Budgetary Slack During Asymmetric Information Conditions? Advances in Management Accounting, 13, 223–244.
Young, S. M. (1985). Participative Budgeting : The Effects of Risk Aversion and Asymmetric Information on Budgetary Slack. Journal of Accounting Research, 23(2), 829–842.
Zahro, H., & Januarti, I. (2016). Pengaruh Partisipasi Anggaran Terhadap Kinerja Manajerial Dengan Presepsi Keadilan Anggaran dan Komitmen Tujuan Anggaran Sebagai Variabel Intervening. Jurnal Akuntansi & Auditing, 13(2), 125–154.
