@article{9c09e99665064a519b3f2945223bde0b,
title = "The Effect of Endogenous Discretionary Control Choice on Budgetary Slack: An Experimental Examination",
abstract = "This study examines the effect of endogenous control choice on budgetary slack. The superior chooses between two alternatives: no control, wherein the superior commits to accept any budget, and a discretionary rejection authority control, wherein the superior decides ex post whether to accept or reject budgets. For both alternatives, we find that slack is lower when the superior chooses an alternative than when it is assigned exogenously. Our theory and results suggest that a superior{\textquoteright}s choice of whether to introduce controls signals a superior{\textquoteright}s expectations and intentions. The superior{\textquoteright}s choice of no control signals trust and an intention to foster a norm of trustworthiness. The superior{\textquoteright}s choice of rejection authority signals an above-average willingness to use rejections to enforce norms. Our results suggest that the value of participative budgeting may be increased if superiors can communicate to subordinates the expectations and intentions behind the design of the control system.",
keywords = "budgetary slack, distrust, endogenous control choice, trust",
author = "Douthit, {Jeremy D.} and Schwartz, {Steven T.} and Stevens, {Douglas E.} and Young, {Richard A.}",
note = "Funding Information: We gratefully acknowledge the helpful comments of Heba Abdel-Rahim, Vic Anand, Markus Arnold, Eddy Cardinaels (editor), Mandy Cheng, Margaret Christ, Leslie Eldenburg, Paul Fischer, Jace Garrett, Jeff Hales, Gary Hecht, Robert Grasser, Alexis Kunz, Michael Majerczyk, Bob Mocadlo, Don Moser, Adam Presslee, Karl Schuhmacher, Ivo Tafkov, Eddie Thomas, Kristy Towry, Greg Waymire, Donnie Young, two anonymous reviewers, and the workshop participants at The University of Arizona, University of Bern, Emory University, Florida State University, Georgia State University, the 2015 AAA Annual Meeting, 2016 Southeastern Summer Accounting Research Conference, 2017 CEAR Conference on the Effects of Formal and Informal Controls on Organizational and Market Risk, 2017 ABO Midyear Meeting, and 2018 MAS Midyear Meeting. We also thank Phil Brookins for his experimental assistance. This research was funded by a research grant from the School of Accountancy, J. Mack Robinson College of Business, Georgia State University. Publisher Copyright: {\textcopyright} 2022, American Accounting Association. All rights reserved.",
year = "2022",
month = sep,
day = "1",
doi = "10.2308/JMAR-2020-016",
language = "English (US)",
volume = "34",
pages = "99--118",
journal = "Journal of Management Accounting Research",
issn = "1049-2127",
publisher = "American Accounting Association",
number = "3",
}