An Empirical Evidence On The Reason And Performance Consequence Of Budget Slack For Listed Enterprises

Enterprise Budgetary slack are very common at home and abroad , so the reasons for slack has been a hot theoretical study and practical issues. Research has shown that agency theory and contingency theory can well explain the reason of slack. From the agency theory, the slack is damage to enterprise performance. On the contrary, contingency theory prove that the slack is in response to the existence of business uncertainty and it is reasonable behavior. However, from the existing empirical results of the investigation, whether at home or abroad, the study of this issue are not clear and consistent conclusions. In this paper, in-depth study of the results of previous studies both at home and abroad and on the basis of publicly listed data of chisels market, we want to known which theory is more proper to Chinese's market, and also research the relationship between slack and enterprise performanceSelecting the manufacturing sector of China's Shanghai and Shenzhen listed companies which disclose the budget as the study samples, use the dates of sample firms from 2006 to 2008 years .By virtues of formerly fruits from Chinese and foreign scholars, this paper decompose agency theory as variables such as the nature of major shareholder, firm size, growth and strategy as key factors in the contingency theory to research their property in china. Corporate return rate on net assets as explanatory variable, this paper has four kinds of indicators of budgetary slack as explanatory variables; to the industry dummy variables as control variables, then use descriptive statistics, correlation analysis and logit regression analysis for empirical analysis.The thesis consists of five parts:PartⅠ, introduction. It is about the motivation of choosing the problem and the research approach.PartⅡ, basic theoretical analysis. First of all define the concept of budgetary slack, and then describes the theoretical basis for budgetary slack. Based on the budgetary slack "degree" perspective to budgetary slack is divided into self-interest and rational nature theses two type of budgetary slack and analyze their impact. Finally point out budgetary slack results and the concept of enterprise performance. PartⅢ, preparation for empirical test, proposed assumptions and research design. First, according to China's actual situation, analyze the relationship between influence factors of slack under agency theory, contingency theory and self-interest and rationality budgetary slack, with pointing out the relationships between two types of budgetary slack and corporate performance and proposing the corresponding research hypothesis. Then carry out the design and sample selection variables for the empirical test.PartⅣ,is empirical analysis the principle of the thesis. In this paper, firstly introduce variables descriptive statistics. To identify the explanatory power of two theory in chain, secondly, the correlation and Logit regression analysis. Finally based on the median length of business growth, the initial sample is divided into two groups to identify their budget slack whether have any impact on corporate performance.Based on these conclusion,partⅤ,the paper have some policy recommendations and also point out the shortages of this paper to be deeply researched in other Papers.The innovation which lies on this paper is the paper divided initial samples into two groups by the median length of business growth compared to logit multiple regression analysis while other documents directly to construct a model to research.