Alan S. Dunk

Task uncertainty and its interaction with budgetary participation and budget emphasis: Some methodological issues and empirical investigation

Abstract This paper reports the results of a study which re-examines Brownell & Hirst ( Journal of Accounting Research , Autumn 1986). In that study, it was hypothesized that Brownells result ( Journal of Accounting Research , Spring 1982), showing that budget participation and budget emphasis in evaluation should be aligned, would hold only where task uncertainty was low. With managerial performance as the criterion, Brownell & Hirst were unable to find support for the hypothesis. This study incorporates variations in measurement and sampling and finds results which provide strong support for Brownell & Hirsts hypothesis.

Reliance on budgetary control, manufacturing process automation and production subunit performance: A research note

Abstract The degree to which reliance can be placed on budgetary control in the assessment of production subunit performance, particularly with the advent of manufacturing process automation involving, for example, robots and CAD/CAM, is problematic. While budget-based control systems are extensively employed in organizations, such usage does not provide clear evidence of their utility as performance enhancement vehicles as advances are made in the automation of manufacturing processes. The purpose of this paper is to report the results of a study which examines the effect of automation on the link between reliance on budgetary control and production subunit performance. The findings suggest that manufacturing process automation moderates the relation between reliance on budgetary control and departmental performance. As such, firms may benefit from a reliance on budgetary control in the evaluation of production subunit performance as manufacturing processes become more automated.

The effects of job-related tension on managerial performance in participative budgetary settings

Abstract The association between job-related tension and managerial performance has been the subject of speculation and some preliminary research, with little resolution. Four potential reasons for the lack of resolution on this issue are explored in this paper. These are (1) the use of single organizational samples in prior studies, (2) the measurement of managerial performance, (3) the prospect of a curvilinear relation between job-related tension and performance, and (4) the possibility that budgetary participation moderates the association, if any, between job-related tension and performance. By systematically varying both the measurement of managerial performance and the employment of random sampling, the findings of this research suggest that the association between job-related tension and performance is significant and negative. There is no evidence to support the proposition that participation moderates the relation between job-related tension and performance.

An Analysis of Departmental Effectiveness, Participative Budgetary Control Processes and Environmental Dimensionality Within the Competing Values Framework: A Public Sector Study

The competing values framework (CVF) has emerged as an integrative and consolidating mechanism to facilitate an examination of those factors that contribute to effectiveness in organizations. The CVF is adopted to investigate systematically the extent to which specific dimensions of the environment impact on the effectiveness of participative managerial control processes in terms of enhancing performance. The results based on a sample of 323 section managers from a wide range of public sector organizations throughout Australia suggest that they find complexity to be the crucial environmental dimension that influences the effectiveness of participative control processes in enhancing performance. The findings suggest that public sector managers may not be subject to the same environmental constraints as their counterparts in the private sector.

The incidence of budgetary slack: a field study exploration

Extends the investigation into the nature of the relation between participative budgeting and budgetary slack. The literature focusing on this association can be divided into two groups, the conclusions of which are inconsistent with one another. One camp argues that managers intentionally use participation to create slack, while the other argues that managers, through anticipation, reduce slack in their budgets. In attempting to reconcile these differences, it has been suggested that superiors’ evaluative styles and information asymmetry are two factors which may influence this relation. The mechanism, however, by which they may exert an influence is unclear, since the cross‐sectional evidence also conflicts regarding the nature of the impact of evaluative style and information asymmetry on the association between participation and slack. A field study was conducted to allow an in‐depth analysis to be made. The study proposes that the association between participation and slack arises from a complex process of interactions between the parties involved. Although managers were aware that participation provided them with the opportunity to build slack into their budgets, they did not necessarily attempt to do so for reasons that include moral, ethical and career advancement considerations.

Auditor independence issues in China

China is conducting an open market policy and Chinese firms are seeking independent audit services. As a result, the Chinese accounting profession is expanding at a tremendous speed, and has played an important role in economic reform. However, Chinese auditing operates in a very different environment from those experienced in Western countries. Consequently, there is considerable concern about auditor independence in China. The purpose of this paper is to examine some reasons for a lack of independence in the Chinese audit profession. We critically review empirical evidence regarding auditor practice in China. We then make some suggestions that might improve auditor independence.

The joint effect of participative budgeting and managerial interest in innovation on departmental performance

Innovation is frequently argued to be critical to organizational performance in an increasingly competitive international marketplace. The literature suggests that one factor influencing a firms competitive position is the degree to which subordinates are innovative. Subordinate managers typically have the skills that enable them to bring into their firms new ideas arising from their interest in, and their knowledge of, developments in their areas of expertise. If managers have an interest in innovation, then participation in the budget setting process may enable them to be party to budgets which not only reflect resource commitments and other budgetary provisions associated with their innovation proposals, but also the expectation of benefits arising from innovations in terms of enhanced departmental performance. The results of the study suggest that participation and performance are positively related when subordinate interest in innovation is high, but they are not associated when interest in innovation is low.

The effects of managerial level on the relationship between budgetary participation and job satisfaction

The literature provides little research support for a consistent correlation between participation in the budget setting process and job satisfaction. The findings of empirical research suggest that the degree of authority inherent in jobs at different managerial levels may influence the relationship between participation and job satisfaction. The extent to which participative budgeting enhances job satisfaction may be dependent upon the degree to which managers expect that participation in the budget setting process provides them with the opportunity to exercise control inherent at their managerial level over their areas of responsibility. The purpose of this paper is to evaluate whether or not the relationship between participation in the budget setting process and job satisfaction is contingent upon managerial level. The findings of an empirical study conducted in Britain suggest that high-level managers derive significantly greater job satisfaction from participation than do low-level managers.

The Reintroduction of the True and Fair Override and Harmonization with IASC Standards in Australia: Lessons from the EU and Implications for Financial Reporting and International Trade

Abstract Two issues currently facing Australia having implications for financial reporting and trade are first, calls for the reintroduction of the true and fair view (TFV) override and second, the move to harmonize Australian accounting standards with those of the International Accounting Standards Committee (IASC). The purpose of the article is to examine the likely effects of such moves given the increasing globalization of both financial and product markets. The conclusions of the article suggest first, a reintroduction of the TFV override would be consistent with its role in the Fourth Directive as the fundamental principle of financial reporting. Second, harmonization with IASs by default will allow an override, as IAS 1 now provides for one. Third, Australias harmonization of financial reporting requirements with the wider global community may be impeded because of inconsistencies between IASs, US GAAP, and EU Directives. Hence, the proposed reintroduction of the TFV override together with IASC reporting is unlikely to enhance Australias link to the wider global community, leading to potential negative consequences in both financial and product markets.

Short-term R&D bias, competition on cost rather than innovation, and time to market

Mounting evidence indicates that capital markets often apply short-term pressure on firms to gain short-term results by focusing primarily on reported financial performance. As a result of short termism, it has been argued that companies are likely to cut expenditure on R&D which might otherwise improve longer-term performance. As there is a growing consensus that R&D is critically important to both organizational and national performance, short termism may have significant detrimental organizational consequences. One implication arising from a short-term R&D bias, and examined in this paper, is its effect on market time reduction. Arguments are examined that suggest a dominant R&D strategy is to reduce product time to market. Concerns have been expressed, however, that such a strategy is applicable in specific circumstances only. A review of the literature suggests that analyst and shareholder bias against high-risk, long-term research in favor of lower-risk, short-term product R&D influences organizations to reduce the time it takes to get a product to market when the emphasis in the marketplace is on cost competition rather than product innovation. The findings of the study suggest that when the emphasis on competition on cost rather than innovation is low, short-term R&D bias does not affect market time. In contrast, when the emphasis on competition on cost rather than innovation is high, the results indicate that short-term R&D bias positively influences market time reduction. The study concludes with suggestions for further research.