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[Abstract] In this paper, the Western developed countries since the 20th century, 60 years to the
recent relaxation of the major Research on the budget literature is reviewed, theoretical research
on foreign budgetary slack content, research results and research paradigms and other major
issues were reviewed with a view to foreign budgetary slack theoretical research to sort out the
ideological context, the research results show the research paradigm to learn from, and on this
basis, the future of research on China's inspiration.
[Keywords:] budget management; budgetary slack; literature review; enlightenment

1 Introduction

Strategic allocation of resources as a means of (Allen Schick, 2000), the budget has become a
modern enterprise an important means of internal management control and get more widely
disseminated (Beyond Budgeting Round Table, 2001). From our point of view, the budget
management practices have already gone through more than 20 years, with the launch of the State
Economic and Trade Commission and the Ministry of Finance Enterprise Budget management
requirements specification to implement the vast majority of enterprises of all types of budget
management practices are under way. At the same time, the budget management theory and
practice of research also accompanied by the Development of the budget ever more prosperity.
According to the National Core Journals of the accounting class this five-year period 2002-2006
published by the relevant Xueshulunwen statistical carried out in order to budget management as
the main research contents of the chapter number nearly 300, but as time goes on, an annual surge
in number of papers (2002 to 2006, accounting for 6.45%, respectively, 8.47%, 22.18%, 27.02%,
35.88%). This also shows that the budget management theory has become China's management
and accounting theory research hotspot. However, as a budgetary control has not yet been resolved
a major problem (Horngren, 1982), budgetary slack (budgetary slack) limit the presence and
influence to play the role of budget management. But also in Western countries, the causes and
control of budgetary slack by people more and more attention to budget management theory has
also become a prominent issue, forming a series of classic literature. This paper developed
countries of Western theories of relaxation in the budget overview of research, combing the
ideological context, research results show to introduce the mainstream research paradigm, and
look forward to the relevant research on domestic enlightenment.

Second, the research content of foreign budgetary slack

Study abroad, budgetary slack, began in the 20th century, 60 years. With the other elements of
management studies, in addition to drawing on the study of economics and management of the
latest achievements, the general characteristics of the use of econometric models outside the areas
covered is very broad, but very rich in content of the study.

(I) the discovery of budgetary slack

In earlier studies, Cyert and March (1963), believes that budgetary slack from the negotiation
process, Schiff and Lewin (1968) followed by a large Fortune 100 company's three division found
that, after consultation sales target can be easily achieved. Lowe and Shaw (1968) research shows


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that sales forecasts will lead to budgetary slack. They have five large organizations randomly
selected 32 managers, and give them a personal face to face survey, 80% of the respondents clearly
recognized that their negotiations is to relax the budget. Onsi (1973) study concludes that the view
that budgetary slack manipulation will occur in any year. Schiff and Lewin (1968) estimates that
operating costs of division there are about 20% -25%, it should be attributed to budgetary slack.
They pointed out that this ratio is an organization the actual cost and the smallest possible cost
differences.
In the literature, with regard to budgetary slack There are two main conclusions. First, the
manager was interested in manufacturing and strive to gain budgetary slack (Cyert and March,
1963; Lowe and Shaw, 1968; Schiff and Lewin, 1968,1970; Williamson, 1964); second, budgetary
slack widespread in many organizations China (Merchant, 1985a).

(B) budgetary slack and its impact

Many studies were done on the budget, the definition of relaxation, this article only an
overview of a representative point of view. Merchant (1985a) the definition of budgetary slack is
within a certain range of the total budget and necessary budget for the difference. Mann (1988)
suggested that budgetary slack is underestimating the revenue and overestimate the cost, or to
make it easier to achieve budget targets underestimate viability behavior. In his view, budgetary
slack is 'manager, who knowingly created a practical need to go beyond the amount of budgetary
resources, or deliberately underestimate the capacity of' Moene (1986) defined budgetary slack for
a reasonable budget and the real difference between the minimum cost. Lukka (1988, p282-283)
that, in a relaxation of the budget, the budget figures would be interested in developing a more
easily achieved than forecast, while the latter is the budget-makers predict the 'honest budget
estimates'. Young (1985) that budgetary slack is 'managers who knowingly created a practical need
to go beyond the amount of budgetary resources, or deliberately underestimate the capacity of', if
the superior choice budget standards to assess the subordinates as a reference job performance,
this tendency particularly apparent. Waller (1988) From another perspective, consider that the
relaxation is beyond the completion of a work must be part of the resources. In addition, there are
many scholars (Anthony and Govindarajan, 2001; Little et al., 2002; Nouri, 1994) that when the
estimated cost, budget revenues or production volume to these indicators are the results of future
operations and non-bias estimated cases, planned out, but in actual implementation is more easily
achieved than the budget targets, this phenomenon is called budgetary slack. All the above point of
view there are two things in common, first, budgetary slack is that people in the budget
management, an underestimation of income and productive capacity, and (or) on the costs and
resource consumption overestimated; Second, budgetary slack is a function of alienation
(dyefunctional) (Collins, 1978; Merchant, 1985a, 1985b; Schiff and Lewin, 1968; Williamson, 1964).
With this functional characteristics of the organization of alienation, its economic consequences is
the lack of control and decision-making Information in the distortions caused by (Govindarajan,
1986; Nouri, 1994). Onsi (1973) concluded, regardless of the circumstances and the form of
budgetary slack is a function of the degree of alienation, this alienation depends on budget
management.
From the manager's point of view, budgetary slack can also avoid the adverse environmental
unpredictability. As a result, the budget department manager will be to stimulate a tendency to


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deviate from the budget for assessment to ensure that their budgets more easily achieved, it will
look better their performance (Merchant, 1985). Higher level managers in the use of accounting
data evaluation when the results of operations, it will because they do not have all the information
is biased.
On the other hand, due to budgetary slack will produce inefficiencies and waste, so based on
self-interest on the basis of budgetary slack is unhealthy for the organization. Non-realistic goals
means that managers do not need to run out of resources, better able to achieve the necessary
results, it is unacceptable (Kren, 1993). From the agency theory framework is concerned, taking
into account the reduction of information asymmetry, and some companies have designed incentive
mechanism and performance enhancing tools to encourage managers in the completion and over
the budget targets, to ensure that reports out of their grasp all the information (Mann , 1988; Van
der Stede, 2000). However, these efforts to reduce the slack with little success.
However, there are point of view, given the budgetary slack managers to respond effectively to
the changing business environment, the ability to (Cyert and March, 1963; Gabriel, 1978; Merchant
and Manzoni, 1989). Dunk (1995) also found that some of the effectiveness of budgetary slack, he
noted that budgetary slack can ease the difficult task of seeking good performance due to negative
effects. In addition, he also suggested that if the manager's organizational responsibility heavier,
and their participation in the budget would be likely to result in reduction of budgetary slack; the
other hand, if the manager's organizational responsibility lighter, and their participation in the
budget can easily lead to the emergence of budgetary slack.

(C) the causes of budgetary slack

Western scholars believe that the control of relaxation to solve the budget problem, the most
important thing is to explore the reasons for formation of budgetary slack, and on this basis, the
precise effect of budgetary slack has to do with the intrinsic link between budgetary slack. So, in a
number of budgetary slack in the literature, the factors affecting budgetary slack and budget
relaxation study of the correlation between, occupying most of the space. Overall, the researchers
involved in these factors include the two aspects, one is associated with the budget management
itself, the impact of factors; the other is outside the budget management factors.
[Abstract] In this paper, the Western developed countries since the 20th century, 60 years to the
recent relaxation of the major research on the budget literature is reviewed, theoretical research on
foreign budgetary slack content, research results and research paradigms and other major issues
were reviewed with a view to foreign budgetary slack theoretical research to sort out the
ideological context, the research results show the research paradigm to learn from, and on this
basis, the future of research on China's inspiration.
[Keywords:] budget management; budgetary slack; literature review; enlightenment

1 Introduction

Strategic allocation of resources as a means of (Allen Schick, 2000), the budget has become a
modern enterprise an important means of internal management control and get more widely
disseminated (Beyond Budgeting Round Table, 2001). From our point of view, the budget
management practices have already gone through more than 20 years, with the launch of the State


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Economic and Trade Commission and the Ministry of Finance Enterprise Budget management
requirements specification to implement the vast majority of enterprises of all types of budget
management practices are under way. At the same time, the budget management theory and
practice of research also accompanied by the development of the budget ever more prosperity.
According to the National Core Journals of the accounting class this five-year period 2002-2006
published statistics related to Xueshulunwen carried out in order to budget management as the
main research contents of the chapter number nearly 300, but as time goes on, an annual surge in
number of papers (2002 to 2006, accounting for 6.45%, respectively, 8.47%, 22.18%, 27.02%,
35.88%). This also shows that the budget management theory has become China's management
and accounting theory research hotspot. However, as a budgetary control has not yet been resolved
a major problem (Horngren, 1982), budgetary slack (budgetary slack) limit the presence and
influence to play the role of budget management. But also in Western countries, the causes and
control of budgetary slack by people more and more attention to budget management theory has
also become a prominent issue, forming a series of classic literature. This paper developed
countries of Western theories of relaxation in the budget overview of research, combing the
ideological context, research results show to introduce the mainstream research paradigm, and
look forward to the relevant research on domestic enlightenment.

Second, the research content of foreign budgetary slack

Study abroad, budgetary slack, began in the 20th century, 60 years. With the other elements of
management studies, in addition to drawing on the study of economics and management of the
latest achievements, the general characteristics of the use of econometric models outside the areas
covered is very broad, but very rich in content of the study.

(I) the discovery of budgetary slack

In earlier studies, Cyert and March (1963), believes that budgetary slack from the negotiation
process, Schiff and Lewin (1968) followed by a large Fortune 100 company's three division found
that, after consultation sales target can be easily achieved. Lowe and Shaw (1968) research shows
that sales forecasts will lead to budgetary slack. They have five large organizations randomly
selected 32 managers, and give them a personal face to face survey, 80% of the respondents clearly
recognized that their negotiations is to relax the budget. Onsi (1973) study concludes that the view
that budgetary slack manipulation will occur in any year. Schiff and Lewin (1968) estimates that
operating costs of division there are about 20% -25%, it should be attributed to budgetary slack.
They pointed out that this ratio is an organization the actual cost and the smallest possible cost
differences.
In the literature, with regard to budgetary slack There are two main conclusions. First, the
manager was interested in manufacturing and strive to gain budgetary slack (Cyert and March,
1963; Lowe and Shaw, 1968; Schiff and Lewin, 1968,1970; Williamson, 1964); second, budgetary
slack widespread in many organizations China (Merchant, 1985a).

(B) budgetary slack and its impact

Many studies were done on the budget, the definition of relaxation, this article only an


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overview of a representative point of view. Merchant (1985a) the definition of budgetary slack is
within a certain range of the total budget and necessary budget for the difference. Mann (1988)
suggested that budgetary slack is underestimating the revenue and overestimate the cost, or to
make it easier to achieve budget targets underestimate viability behavior. In his view, budgetary
slack is 'manager, who knowingly created a practical need to go beyond the amount of budgetary
resources, or deliberately underestimate the capacity of' Moene (1986) defined budgetary slack for
a reasonable budget and the real difference between the minimum cost. Lukka (1988, p282-283)
that, in a relaxation of the budget, the budget figures would be interested in developing a more
easily achieved than forecast, while the latter is the budget-makers predict the 'honest budget
estimates'. Young (1985) that budgetary slack is 'managers who knowingly created a practical need
to go beyond the amount of budgetary resources, or deliberately underestimate the capacity of', if
the superior choice budget standards to assess the subordinates as a reference job performance,
this tendency particularly apparent. Waller (1988) From another perspective, consider that the
relaxation is beyond the completion of a work must be part of the resources. In addition, there are
many scholars (Anthony and Govindarajan, 2001; Little et al., 2002; Nouri, 1994) that when the
estimated cost, budget revenues or production volume to these indicators are the results of future
operations and non-bias estimated cases, planned out, but in actual implementation is more easily
achieved than the budget targets, this phenomenon is called budgetary slack. All the above point of
view there are two things in common, first, budgetary slack is that people in the budget
management, an underestimation of income and productive capacity, and (or) on the costs and
resource consumption overestimated; Second, budgetary slack is a function of alienation
(dyefunctional) (Collins, 1978; Merchant, 1985a, 1985b; Schiff and Lewin, 1968; Williamson, 1964).
With this functional characteristics of the organization of alienation, its economic consequences is
the lack of control and decision-making information in the distortions caused by (Govindarajan,
1986; Nouri, 1994). Onsi (1973) concluded, regardless of the circumstances and the form of
budgetary slack is a function of the degree of alienation, this alienation depends on budget
management.
From the manager's point of view, budgetary slack can also avoid the adverse environmental
unpredictability. As a result, the budget department manager will be to stimulate a tendency to
deviate from the budget for assessment to ensure that their budgets more easily achieved, it will
look better their performance (Merchant, 1985). Higher level managers in the use of accounting
data evaluation when the results of operations, it will because they do not have all the information
is biased.
On the other hand, due to budgetary slack will produce inefficiencies and waste, so based on
self-interest on the basis of budgetary slack is unhealthy for the organization. Non-realistic goals
means that managers do not need to run out of resources, better able to achieve the necessary
results, it is unacceptable (Kren, 1993). From the agency theory framework is concerned, taking
into account the reduction of information asymmetry, and some companies have designed incentive
mechanism and performance enhancing tools to encourage managers in the completion and over
the budget targets, to ensure that reports out of their grasp all the information (Mann , 1988; Van
der Stede, 2000). However, these efforts to reduce the slack with little success.
However, there are point of view, given the budgetary slack managers to respond effectively to
the changing business environment, the ability to (Cyert and March, 1963; Gabriel, 1978; Merchant


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and Manzoni, 1989). Dunk (1995) also found that some of the effectiveness of budgetary slack, he
noted that budgetary slack can ease the difficult task of the pursuit of good performance due to
negative effects. In addition, he also suggested that if the manager's organizational responsibility
heavier, and their participation in the budget would be likely to result in reduction of budgetary
slack; the other hand, if the manager's organizational responsibility lighter, and their participation
in the budget can easily lead to the emergence of budgetary slack.

(C) the causes of budgetary slack

Western scholars believe that the control of relaxation to solve the budget problem, the most
important thing is to explore the reasons for the formation of budgetary slack, and on this basis, the
precise effect of budgetary slack has to do with the intrinsic link between budgetary slack. So, in a
number of budgetary slack in the literature, the factors affecting budgetary slack and budget
relaxation study of the correlation between, occupying most of the space. Overall, the researchers
involved in these factors include the two aspects, one is associated with the budget management
itself, the impact of factors; the other is outside the budget management factors. Reposted
elsewhere in the Free Papers Download Center
1. Elements of the budget to manage their own research: the impact of budget management per se
there are four main factors, namely, budgetary participation, budget emphasis, budgetary
characteristics of fairness and budget targets.
(1) Budget impact study to participate. Budgetary participation described in this article refers
to management at different levels under the conditions allowed and the mobilization of all levels of
managers in this sector (post) budget formulation, implementation, feedback, etc. to participate
fully in the course of conduct. Many studies in the literature have pointed out that in the budget
preparation process, the subordinates will increase the participation of the potential for emerging
budgetary slack (Antle and Eppen, 1985). Lukka (1988) believed that the budget to subordinate
managers involved in providing a direct result of budgetary slack of the opportunities, while the
low level of budgetary participation will limit these opportunities. With regard to budgetary
participation and budgetary slack the relationship between the conclusion of the study was split
into two camps, both sides concluded that the inconsistent. Party believes that the manager's
intention to use the budget to participate in such measures lead to budgetary slack, to increase
production capacity have a negative effect, prompting the reduction in efficiency (for example,
Schiff and Lewin, 1968); while the other believes that managers adopt the budget participation, will
not increase the budgetary slack (eg, Cammann, 1976; Merchant, 1985a; Onsi, 1973). Onsi (1973)
study explicitly stated that the budget participation is hardly necessary to allow managers to create
budgetary slack. The study concluded that the budget is not only involved in the reduction of
budgetary slack played an important role, but also believe that budgetary participation helps
managers are convinced that the budget is neither a game nor is it an accounting tool, which will
make them feel and Without some pressure and forced to create budgetary slack. Merchant (1985a)
also found that budgetary participation and managers create budgetary slack between the tendency
of negative correlation. Cammann (1976) conducted a study, so that participation can reduce their
subordinates defensive reactions, including a budget slack, and can make use of budget data
superiors evaluate the performance of subordinates. And Murray (1990) study even pointed out
that budgetary participation would make the managers feel that there is no need to create


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budgetary slack budgeting, and therefore would tend to make more difficult their mission
objectives.
The concluding statement of these conflicts, budget participation and budgetary slack is not a
simple relationship between the direct relationship, this relationship may depend on many factors
(Macintosh, 1985). Hopwood (1972,1973) once pointed out that budgetary participation is a
complex social process, this process with other phenomena (including the assessment of
environmental needs and leadership style, etc.) are closely related. For this reason, a noteworthy
phenomenon is that many researchers in the study budget, the relationship between participation
and budgetary slack, they all used, such as budget emphasis and information asymmetry, personal
characteristics, etc., as control variables (for example, Dunk, 1997) .
(2) budget emphasis impact studies. Budget emphasis described in this article refers to a higher
level managers to the completion of budget targets as the basis for assessment at all levels
(departments, and positions) in operation or management performance, and to assess results as
being the evaluators to develop pay or incentive programs basis. Literature data indicate that
budget emphasis also will affect the budget, participants, and related to budgetary slack. Schiff and
Lewin (1970) aptly pointed out that if subordinates aware of their remuneration depends on the
budget, they will participate in the budget as a positive. Schiff and Lewin (1970) that the budget is a
typical organizational performance reference standard, and because the lower a frequent
participant in the development of this standard, managers will strive to make the standard as they
believe the budget can be achieved. As the manager pay often depends on comparison with the
standard of performance, it may result is enacted after the two sides bargain budget, the budget
contains the relaxation factor. In this sense, the achievement of the objectives and the goal of
budgetary slack is considered equivalent (Merchant and Manzoni, 1989).
Hopwood (1972) found to have budget constraints model evaluation managers, and other
evaluation methods, as will be trouble. From a group of seven major multinational companies from
the composition of a sample of 107 managers study, Onsi (1973) study concluded that: managers to
create budgetary slack to meet the budget-based performance evaluation requirements. Cammann
(1976) in the study of a larger utility company managers to the conclusion that post: If the higher-
level emphasis of the evaluation the purpose of the budget information, the lower would be to
create budgetary slack to respond. Brownell and Mcinnes (1986) suggested that if there is a lower-
level participation is expected from the budget - and this way the expected results linked to the
budget, they would negotiate the budget, when budgetary slack has emerged. Merchant (1985a)
study results show that the differences in interpretation of the requirements and include
participation in their own performance linked reward system is not encourage managers to create
budgetary slack. Druuy (1985) pointed out that, if we adopt to enhance the performance of the tight
budget, approach, budget management, the reality of bias is likely to occur. Onsi (1973) concluded
that, unless the budget was set at a reasonable level, otherwise managers will tend to create
budgetary slack. Early studies have shown that the confidence of the budget and budget relaxation
effects produce a positive correlation (Merchant, 1985a; Onsi, 1973). Of course, there are some
contrary findings, Murry (1990) on a lower budget, stressed that it would bring about less incentive
to create budgetary slack managers. He proposed that the budget performance assessment at a
lower stress mode, the budget involved in the budget will be higher than under stress have a
greater budgetary slack.


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(3) Budget a fair impact studies. Fairness is described in this article refers to the budget in the
budget management process, between the upper and lower levels, parallel is a harmonious and
equal relationship between colleagues, and a budget for each participant be able to enjoy fair
treatment. A lot of papers have studied the organizational decision-making process and interaction
on fairness issues, including the budget and income distribution, performance and other related
settings (Brockner and Wiesenfeld, 1996; Colquitt et al, 2001; Greenberg, 1990). Staley and Magner
(2005) believed that the budget impact of subordinate equity trust for direct superiors, while the
direct supervisor of the trust would affect the tendency to subordinate budget slack. The budget
impact of trust in a fair, while the trust in turn tend to affect the budget slack. Therefore, the budget
fair to have a major impact on the budget slack. The researchers divided into two kinds of the
budget situation in a fair, one procedural fairness (procedural fairness), namely, the preparation of
the budget process is fair; second is a fair exchange (interactional fairness), namely, direct
supervisor in the implementation process of the budget process is fair , this will affect the two kinds
of fairness under the direct supervisor's trust. Budget participants in the fairness of the evaluation
process should be proposed, a formal organizational decision-makers need to provide to them to
express their views as well as the opportunity to be heard against the irrational, the program to
ensure accurate information contained in the decision-making (Leventhal, 1980; Greenberg, 1986;
Barrett -Howard and Tyler, 1986; Tyler, 1988; Magner et al, 2000). In evaluating the fairness of
exchanges, the budget, the participants focused on several important factors, such as whether
policy-makers to make decisions by the impact of interpersonal sensitivity, as well as whether
policy-makers to make accurate and comprehensive decision-making explanation (Bies and Moag ,
1986; Tyler and Bies, 1990; Brockner and Wiesenfeld, 1996). Studies have shown that interaction
of the fairness of the procedures and the impact a manager's attitudes and behavior, such as job
satisfaction, organizational loyalty, the right to organize behavior, management assessment,
business objectives and performance (Colquitt et al, 2001). In a recent related study, Little et al
(2002) found that interaction with the budget process and the fairness of such variables can affect
the tendency of budgetary slack. Study of social exchange theory, the researchers concluded that,
through the budget process and the fairness of the process of interaction may weaken the tendency
of the manager's budgetary slack.
Studies have shown that the fairness of the procedures and contacts the employee trust in
organizations and organizational leadership are important factors (Brockner et al, 1997; Konovsky
and Pugh, 1994; Mayer et al, 1995). Brockner and Siegel (1996) attributed this phenomenon to
provide to employees the fairness of the procedures and contacts, that is, employees look forward
to the future of the organization and the organization and leadership from those who have acquired
their valuable benefits. The organization of a fair decision-making process can not only provide
material benefits for their employees, but also can bring the spirit of earnings, in which the
program can highlight the staff, the organization of staff members as a collective, thus increasing
the employee's self-confidence. Brockner and siegel (1996) pointed out that the structural
characteristics of formal procedures makes them more prone to think that they do not change over
time. Therefore, the procedural fairness of providing such information, the staff hopes to get a long-
term value from the organization of material and spiritual benefits; procedural fairness is stronger,
there are more long-term benefits of employees want. As a result, when the procedural fairness is
relatively high, the staff makes them more vulnerable to their own organizations and agents


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conduct damage.
Reposted elsewhere in the Free Papers Download Center
(4) The budget target characteristics of impact studies. The characteristics of budget targets
described in this article, refers to the clarity of budget goals and the difficulty of a combination of
both. Goal-definition refers to such an extent that, in this level can be under the budget target has
been professional and clearly expressed, can be responsible for implementation of these budget
unit manager understood (Yuen, DCY, 2004). Locke and Schweiger (1979) pointed out that the goal
of clarity will improve business performance, on the contrary the lack of clarity can lead to staff
confusion, tension and dissatisfaction. Hirst and Yetton (1999), and Weingart (1992) pointed out
that the additional task interdependence will lead to the completion of budget targets managers
with uncertainty and lack of clarity. These are not clear objectives, will reduce the operational
performance.
The clarity of the mission objectives of the negative impact on business performance, there
were several significant studies of representative (Imoisili, 1989; Ivancevich, 1976; Steers, 1976).
The impact of budgetary slack from the point of view, the level of participation than the budget
even more important factor is, with no clear goals to work managers will be faced with a target
completion closely related to the higher uncertainty. Rose (1995) found that, in this uncertain
environment, the work manager, will lead to higher work pressure. Managers who had been born
budgetary slack, it often is to reduce the uncertainty of the completion of budget targets, or ease the
work pressure. Budget target will be from a very loose and very easy to very tight and very difficult
to achieve change. In accordance with Locke and Schweiger (1979) point of view, goal difficulty can
be defined as: In accordance with the standard measurement, the possibility of completing a certain
level of the task. Difficult goals require more effort, and may need more knowledge and skills. From
another point of view, easily achievable goals requires less effort, as well as knowledge and skills.
Hirst and Lowy (1990) found that difficult goals than the medium difficulty setting goals, easy
goals, would spur better performance. Studies have revealed that the budget can be observed
between goal difficulty and performance has a strong correlation (Ezzamel, 1990;
Hirst, 1981; Hofstede, 1968; Kenis, 1979; Locke and Schweiger,
1979; Mia, 1989). For example, Kenis (1979) believed, 'tight but achievable' in budget
methodology for motivating managers to complete a better performance, is the most effective
means. Relatively easy to achieve the goal is not encouraging managers to pursue a higher level of
performance, because they can not produce job satisfaction (Mia, 1989). In recent years, through
empirical research found that managers with a clear budget targets may have a lower budget slack
orientation, good communication and incentive systems can lead to a clear budget targets and
reduce the goal difficulty (Yuen, DCY, 2004).
2. From the budget management, factors outside the study.
The impact of budget management other than the three main factors, namely, asymmetric
information, behavioral factors and organizational strategies.
(1) The impact of information asymmetry studies: the vast majority of the research literature in
this regard is the information asymmetry as a control variable in use. The researchers believe that
subordinates involved in the estimate due to the extent of relaxation depends on the level of
information asymmetry. Asymmetric information from their subordinates and their owners can
influence decision-making process between the supervisor information (such as: Baiman and


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Evans, 1983; Coughlan and Schmidt, 1985; Penno, 1984). Subordinates often have a characteristic,
they have more than their superiors and accurate information, which are related to those factors
that can affect its performance (Chow et al., 1988,1994; Kren and Liao, 1988; Waller, 1988), and to
exchange information and supervisors can promote collaboration and evaluation of organizational
activities (Waller, 1988). For example, Blanchard and Chow (1983) that the exchange can ensure
that the department managers to better understand their areas of responsibility, in accordance
with budget targets, and how to dry before it can receive a good performance.
Magee (1980) and Murray (1990) that if the boss know that their subordinates have more
secret information, the budget will be reinforced in order to be more accurate. Inside information
may lead to better evaluation of performance (Murray, 1990). As the promotion of information
flow, the budget to the supervisors involved in a potential opportunity to provide access to those
internal information (Baiman, 1982; Baiman and Evans, 1983; Magee, 1980; Murray, 1990). Of
course, such a possibility is that subordinates might say lie or to hide some or all of the inside
information not allow supervisors to be, resulting in relaxation of the budget occurs (Chow et al.,
1994; Christensen, 1982; Harrell and Harrison, 1994 ; Young, 1985).
Young (1985) study indicated that, when the budget was participatory, with a subsidiary of
inside information inside information than the subordinates did not lead to more budgetary slack.
In the Young (1985) empirical studies, even though he found that the relaxation involved in the
project to allow the level of non-zero, but these projects, whether with or without inside
information, their relaxation levels were not different. Kanodia (1993) analysis demonstrated that
when the subordinate has on the operating environment of the internal information, budgetary
participation will become an ideal coordination mechanism. He thinks that this budget can also
assign tasks, coordinate actions, provide a baseline level, the benchmark for subsequent
performance evaluation of a control standard.
There are also many studies have shown that: information asymmetry and budget emphasis in
influencing budget participation and budgetary slack when interrelated. For example, if the
information asymmetry is a realistic budget and with the management of stress exist, then the
lower the budget of participation will result in budgetary slack. However, Dunk (1993) found an
evidence that: If the information asymmetry and budget emphasis is very serious, budget
participation will result in a reduction in budgetary slack. Studies have indicated that when
information asymmetry, the budget, the extent of participation and budget emphasis are very high
(low), budgetary slack will be low (high). The results show that these predictive factors and the
nature of the relationship between budgetary slack is more complex than expected.
(2) the impact of behavioral factors: Western scholars because of factors on the impact of
budgetary slack study, learn the principles of behavior theory, subject to the budgetary
participation-related behavior were analyzed in order to seek to explain the economic behavior of
the main budget, participate in the budget the inherent relationship between relaxation. Most of
these studies are scattered throughout many papers, the more focused and representative is the
Onsi (1973) have done research. Onsi (1973) in defining the budget on the basis of relaxation, from
the perspective of behavioral factors to analyze the issue of budget slack and see what behavioral
factors affect on the budget slack. His actions include 13 categories. And budget slack and
behavioral factors specific to determine the specific components. Conclusion of the study indicate
that these behavioral factors associated with a greater relaxation of the budget impact.


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(3) organizational Strategy factors: organizational strategy on the impact of relaxation on the
budget, the Western research literature relating to small, but the strategy as an important factor in
the impact of relaxation on the budget but can not be ignored. Here's organizational strategy, both
corporate-level strategy (ie diversification or specialization), but also business unit competitive
strategy. Van der Stede (2001) study shows that diversification strategy with the business unit
budget slack positive correlation; and cost leadership strategy and defensive strategy than
offensive strategy and differentiation strategy, the more budget slack; budget stress relaxation of a
negative correlation with the budget; objectively determine, to business unit performance-based
incentive system and the budget slack negative correlation; pluralism and individual business unit
performance-based incentive system, the use of positive correlation.

Third, the research paradigm of foreign budgetary slack

After literature review we found that the vast majority of foreign budgetary slack theoretical
studies have adopted the mainstream of empirical research paradigm, but basically a homogeneous
through questionnaires, collecting data, measuring the specific method of statistical analysis. The
main reason is as follows: First, although the budgetary slack is a more complex theory of
categories, but the factors associated with it is the basic set, using empirical research paradigm,
revealing the budget for the relaxation and related factors of the intrinsic link between the objective
existence,Is a very scientific; Secondly, in the West study of management behavior and the
phenomenon of the widespread use of the questionnaire survey method, has a long historical
development, to participate in public acceptance and awareness of a higher degree of objectivity
and credibility of data collection is also good, easy to carry out this type of empirical research; third,
the results of empirical research predecessors is more abundant for future generations laid the
foundation for further research.
Reposted elsewhere in the Free Papers Download Center
IV enlightenment

(1 )Overall Experience
Western developed countries by nearly half a century on budgetary slack review of classic
literature, the author felt that these studies have highlighted the following four characteristics :
1. From the research point of view :
Theoretical study abroad budgetary slack is extremely focused on the exploration of the causes
of budgetary slack, correspondingly, with regard to the causes of budgetary slack research papers
in the research literature also occupies a large proportion. Budgetary slack is a more complex
phenomenon, which produced what the motivation is no doubt of their absolute prerequisite for
effective control. Only clear from the budget and manage their own budget participation, budget
emphasis, budgetary characteristics of fairness and budget targets, as well as from outside the
budget management information asymmetry and related behavior factors such as relaxation of the
inner and Budget, in essence, the necessary link be possible to prescribe the right medicine.
Propose solutions and responses, on this basis is a natural result. Western developed countries in
the study of budgetary slack, it is to do so, and therefore also proved that this is indeed the practice
of budgetary slack control provides a better explanation and prediction capabilities.


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2. From the scope of the study point of view :

Theoretical Study abroad budgetary slack, and not just the budget slack budget management as
only the middle of a problem, but draw heavily on economics, management science, organizational
behavior theory, and even the latest achievements in psychology will be placed on budgetary slack
a more complete and complex systems to examine. Due to budgetary slack objective is affected by
many factors in nature, and its practical consequences which also has a more wide-ranging
implications, so the only way into account, in order to obtain accurate and scientific research.
3. From the methodological point of view :
Theoretical Study abroad budgetary slack is built on the basis of contingency theory. From this
side, the Western developed countries, budgetary slack has an important feature of research is to
analyze specific issues of the contingency theory-based and in combination with other theories, to
study the practice of budgetary slack exists specific issues. In these literature, hardly any talk about
the budget on the budget situation.
4. Research paradigm from the point of view :
Theoretical Study of budgetary slack abroad have adopted the vast majority of mainstream
empirical research paradigm. Because of budgetary slack is a very strong practice areas, and
according to data from the survey, using empirical research methods, the most able to reveal the
budget for relaxation and the intrinsic link between the relevant variables to study the objectivity of
the conclusions of the strongest, but also there can maximize the potential for future generations to
continue to provide the basis for research, while realistic budget to provide theoretical support for
the relaxation of controls.

(Two )Enlightenment
Basically, our budget management theory and research are based on the nature of the budget,
the budget starting point, budget targets, budget model, budget methodology to study such areas as
the focus, but generally from a perceptual point of view, from the budget of practical work
experience and lessons learned, the reasoning out their feelings and experiences. Budgetary slack
theoretical research is no exception. However, with the theoretical study of the in-depth and by the
West in modern theoretical research the impact of budget management in recent years the
situation has improved. Budgetary slack, budget participation, budget emphasis and other areas of
mainstream research began to receive attention, but also made some good research results.
However, the latest budgetary slack with foreign countries compared to theoretical research, we
have there are still some gaps. These issues are embodied in the following four areas :Theoretical
Study on the budgetary slack attention, is still not enough; most of the budget slack as a separate
category of the study; have not used as a budgetary slack contingency theory research
methodology, but rather too much attention to the broad, pan-defined problems, mainly waited
through theoretical research, and to draw general conclusions, applicable to all businesses or the
environment; the current mainstream research paradigm is still not standardized normative
research, only very few empirical research results.
The process of theoretical research, that is, on the basis of previous research results, using the
most advanced research paradigm, combined with practice, the most urgent need to address
specific issues, put forward a new research process. Judging from the current point of view, for
budgetary slack studies, in particular. First, budgetary slack predecessors research should be


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conducted to fully study and study again, especially abroad, a large number of budgetary slack
empirical research literature of learning and re-study, a new starting point for the study on
budgetary slack. Second, the specific characteristics of the main budgetary slack, to economics,
management science, psychology, behavioral science to explain the relevant theory is to explicitly
study the content and study the basic starting point. A lack of theoretical basis, and certainly there
is no depth. Third, empirical research has proven to be the most scientific study of budgetary slack,
the most effective, but also the foreign mainstream research paradigm. In accordance with another
source of research data can be classified as public data method, experimental method and survey
method of three. Publicly available data method is characterized by data collection easy, but the
current domestic publicly available data focused on listed companies, and is basically the financial
indicators. The budget management issues related to internal management of enterprises belonging
to non-public information. Experimental method is based on certain specific group of people for the
investigation of objects, present, many college students and in-service training, business
management officer to be able to derive some valuable information, but with a specific practical
operation, there is a certain distance. The problem is most applicable to research budget slack, and
it is most common in empirical studies of foreign methods, when the devaluation questionnaire
survey. But for now, this method in the operation with a high degree of difficulty. First problem is
alarmingly low response rate, followed by the sensitivity of the issue because of budgetary slack
lead to businesses and researchers with the problem. On the empirical research method itself, since
China has a special system context, direct copying is also considered taboo. Fourthly, for the
improvement of the problems identified and put forward the premise of countermeasures must be
based on objective factors exist in the budget with the objective existence of the phenomenon of
relaxation of the intrinsic relevance, it would be difficult to talk about conclusions of the study to be
scientific. ËË

[Main references]
[1] Dunk, A.S. The effect of budget emphasis and information asymmetry on the relation
between budgetary participation and slack, The Accounting Review,Vol.68,No.2(Apr.,1993)400-
410.
[2] Yuen, D.C.Y., Goal characteristics, communication and reward systems, and managerial
propensity to create budgetary slack, Managerial Auditing Journal, Vol. 19 No. 4, 2004, pp. 517-532.
[3] Kenis, I. (1979), 'Effect of budgetary goal characteristics on managerial attitudes and
performance', The Accounting Review, pp. 707-21.
[4] Harrison, G.L. (1994), 'The cross-Culture generalizabilityof the relation between
participation, budget emphasis and job-related attitudes', Accounting, Organisations and Society,
Vol. 17, pp. 1-15.
[5] Merchant, K.A. (1981), 'The design of the corporate budgeting system, influences on
managerial behavioural and performance', The Accounting Review, pp. 813-29.
[6] Brownell, P. and McInnes, M. (1986), 'Budgetary participation, motivation and managerial
performance', The Accounting Review, Vol. 16 No. 4, pp. 587-600.
[7] Dunk, A.S.,Perera, H.,The incidence of budgetary slack: a field study exploration, Accounting,
Auditing
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