Can Budget Target Precision Improve Budget Effectiveness?

In the past five years,the budget management practice of Chinese local enterprises,represented by large-scale central enterprises and state-owned enterprises,has become the focus of government,academia and enterprises.In Nov 2011 and Mar 2012,the State Council SASAC has issued "on further deepening the central enterprises comprehensive budget management work notice"and "on the central enterprises to carry out management and promotion activities guidance",requiring the central enterprises to accelerate the comprehensive budget management of the Implementation process to enhance the overall management level.In Oct 2014 the Ministry of Finance "on the full implementation of management accounting system construction guidance" pointed out,to promote the construction of management accounting theory system with Chinese characteristics,to support the management accounting theory research and achievement transformation.However,the theoretical research and practice of budget management in our country cannot meet the requirement of enterprise management.The relevant theory and experience of budget management in western countries are difficult to be directly applied to Chinese enterprises.Budget management research should also be based on the local,careful exploration and summary of the unique laws of Chinese enterprises.With the deepening and popularization of information in the world,management information system for enterprise management and management has played an increasingly important role,we can say that the overall budget management information age is already coming.Comprehensive budget management software is the enterprise bigger and stronger,refined management process essential method.In theory,through data architecture and management thinking in the management functions and means of integration,the use of existing information technology conditions,the design of multi-dimensional budget,custom modeling multi-cycle budget process,information technology and budget management closely,To achieve systematic,strategic budget management objectives,and effectively enhance the business budget.However,according to the latest statistics,the current successful implementation of information technology projects in China is only 40%.In the practice of enterprise budget management,there are some enterprises that have implemented the budget management information system but failed to achieve the expected effect of improving the operational efficiency of the enterprise and reducing the deviation rate of the budget.Can budget target precision improve budget effectiveness?Under what circumstances can budget target precision really play a role in improving budget effectiveness?Based on defining "budget target precision",this paper research how budget target precision affect the effect of budget management.To ensure the reliability of the data,this paper adopt in cooperation with a consulting firm,leaded by the managers of budgetary consulting projects to carry out structured in-depth investigations of the company’s 55 clients.The study found that only achieving the budget target precision cannot guarantee to enhance the budget effectiveness;only when the budget management is strategic-orientated,at the same time the control and evaluation of the budget execution is effective,budget targets precision improve the effect of budget management.The conclusions give advice to the enterprises’ managers and consultants that budget management is a systematic management tool,only improving a core part of the system,cannot the expected function works.To improve budget management,the whole system must be optimized.The innovation of this research is defining "budget target precision",this variable is different from the previous literature which is a new standard to quantitatively measure budget targets.Previous scholars have studied how budget targets difficult affect budgetary effectiveness.Meanwhile,the paper also studied whether the strategic orientation of budget management,budget control and budget evaluation play an important role in safeguarding the budget target precision.Findings enrich the theoretical system of budget management,provide theoretical guidance for best practice corporate budget management.Research methods,and previously used to collect the listed company’s annual report data,or to use the experimental study of different data collection and testing enterprises budget management theory method,this paper in cooperation with a professional budgetary consulting firm,with the advisory services of the way through the familiar budget management system project budget management consultant for enterprise customers budgets depth and detailed research,supplemented by structured questionnaires and interviews to obtain a higher reliability of first-hand data.The study concluded that both the method of case study information-rich solid advantage,but also a larger sample implementation of statistical analysis features such research questions more robust.Structural equation model checking,the relationship is conducive to the complex interaction between the variables described and explained in budget management system.This paper is organized as below:The first part introduces research background,significance and research framework;the second part is literature review;the third part is theoretical analysis and hypotheses proposition;the fourth part introduces research design;the fifth part is empirical analysis;the last part is conclusions,drawbacks and prospect of this dissertation.