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Lookup NU author(s): Dr Lana LiuORCiD, Dr Deqiang Deng
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Variance investigation has been identified as an effective accountability-oriented control mechanism for reducing budgetary slack in existing literature (e.g. Webb, 2002). This paper focuses on two further research questions: (1) the extent to which different accountability-oriented control characteristics (i.e. external investigation and self-reporting) of variance investigation impact on budgetary slack; and (2) the moderating effect of moral development on this relationship between accountability-oriented control characteristics of variance investigation and budgetary slack. Our experimental results show that both external investigation and self-reporting can generate accountability pressure to reduce the budgetary slack. More specifically the effect of external investigation on reducing budgetary slack is greater than that of self-reporting. This study also reveals that moral development moderates the effect of external investigation on budgetary slack. When comparing subordinates with low moral development with those with high moral development, our results show that the effect of external investigation on budgetary slack is stronger amongst the former group than that in the latter. This study does not find any moderating effect of moral development on the relationship between self-reporting and budgetary slack. Our study sheds some new light on varying effects of two accountability-oriented control characteristics of variance investigation on budgetary slack, as well as different levels of subordinates’ moral development which may be considered in management control system design and implementation.
Author(s): Liu LYJ, Deng D, Wen S
Publication type: Conference Proceedings (inc. Abstract)
Publication status: Published
Conference Name: 41st European Accounting Association Annual Congress 2018
Year of Conference: 2018
Online publication date: 30/05/2018
Acceptance date: 07/02/2018
Publisher: European Accounting Association
URL: http://www.eaacongress.org/r/home
