The Influence Factors And Economic Consequence Of Budget Slack: Evidence From Listed Enterprises In China

Budget management serves as an effective mean of control in the enterprise management process whether on the theoretical or practical level so that it is increasingly received more attention. Budgetary slack has always been a major hot spot in budget management, especially the causes of budgetary slack and the impact of budgetary slack on the corporate performance. The existing researches on the budgetary slack are mostly from the perspective of organizational behavior to do experimental studies by analyzing human and they generally agreed that budgetary slack had a negative impact on enterprise performance. This paper mainly uses the external data to study budgetary slack, focuses on the budgetary slack between management and shareholders since it can appear on many levels and employs empirical analysis on the listed companies. On the budgetary slack, many articles are based on agency theory and contingency theory, so this paper analyzes the factors as well as the effect of budgetary slack on corporate performance by proposing assumes based on agency theory and contingency theory. Selecting the A-share manufacturing listed companies normally operating from 2006 to 2009, the study finds that there is a significant correlation between the degree of budgetary slack in management and the nature and the holding percentage of controlling shareholders, and a certain relationship between the degree of budgetary slack in management and the strategy the company selects and the growth stage of the company, but later is less obvious. On the other hand, there is no systematic relationship between budgetary slack and the corporate performance, when considering environmental factors, the impact of budgetary slack on corporate performance needs to match the specific circumstances, so budgetary slack does not necessarily lead to the bad performance.