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- Title
THE DETERMINANTS OF BUDGETARY SLACK: A REGULATORY FOCUS THEORY PERSPECTIVE.
- Authors
Venkatesh, Roopa
- Abstract
This paper draws from research in psychology and discusses how Higgins' (1997, 1998) regulatory focus theory can be used to address the anomalies of prior research in budgetary slack that has used agency theory. It is argued that individuals' regulatory focus determines their degree of sensitivity to events involving the presence of positive outcomes and the absence of negative outcomes, which will influence the level of slack they create. The propositions in this paper encourage future research to design participative budgeting experiments that highlight the tension between the traditional agency theory variables and an individual's regulatory focus during the creation of budgetary slack. The theory allows for future research to design experiments in order to investigate whether individuals' reporting behavior during budget participation reflects the standard agency prediction of wealth maximization and their individual regulatory focus. Moreover, finding support for the propositions set forth in this paper would mean that regulatory focus theory has the potential to continue to inform future research in budgetary slack.
- Subjects
BUDGET; SENSORY perception; AGENCY theory; SENSITIVITY analysis; PSYCHOLOGICAL research; GOAL (Psychology); PREDICTION theory
- Publication
Journal of Theoretical Accounting Research, 2012, Vol 8, Issue 1, p90
- ISSN
1556-5106
- Publication type
Article