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The Impact of Accountability-oriented Control Aspects of Variance Investigation on Budgetary Slack and Moderating Effect of Moral Development

Lookup NU author(s): Dr Lana Liu



This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).


Variance investigation is identified as an effective accountability-oriented control mechanism for reducing budgetary slack at ex-ante budgeting stage (e.g. Webb, 2002). This paper focuses on two further research questions: (1) the extent to which two different accountability-oriented control aspects (i.e. external investigation and self-reporting) of variance investigation impact on budgetary slack; and (2) the extent to which moderating effect of moral development places on the relationship between these two accountability-oriented control aspects and budgetary slack. Our experimental results show that both external investigation and self-reporting can generate accountability pressure to reduce propensity of creating slack at ex-ante budgeting stage, in particular the effect of external investigation is greater than that of self-reporting. This study further 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 the latter group. 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 aspects of variance investigation on budgetary slack, which are also moderated by different levels of subordinates’ moral development. These results may be considered in design and implementation of management control systems.

Publication metadata

Author(s): Deng DQ, Liu LYJ, Wen SB

Publication type: Article

Publication status: Published

Journal: Frontiers in Psychology

Year: 2020

Volume: 11

Online publication date: 10/12/2020

Acceptance date: 12/11/2020

Date deposited: 13/01/2021

ISSN (electronic): 1664-1078

Publisher: Frontiers Research Foundation


DOI: 10.3389/fpsyg.2020.583643


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