Abstract
This study aims to address the following research questions: (1) Does a peer monitoring control system provide an ideal opportunity for managers to build slack into their budgets in team-based settings? (2) Does the organizational ethical climate influence managers’ propensity to create budgetary slack? (3) What is the effect of peer monitoring control systems and the organizational ethical climate on managers’ budgetary slack creation? A laboratory experiment was conducted. The results indicate that a peer monitoring control system provides an ideal opportunity for managers to build slack into their budgets. The results of this study suggest that the organizational ethical climate can influence subordinates’ ethical behaviors. It was found that under a weak organizational ethical climate, subordinates were more likely to engage in opportunistic behavior. Finally, the results demonstrated that budgetary slack creation was lowest in the absence of a peer monitoring control system and where there was a strong organizational ethical climate.
| Original language | English |
|---|---|
| Pages (from-to) | 41-64 |
| Number of pages | 24 |
| Journal | Asia-Pacific Management Accounting Journal |
| Volume | 11 |
| Issue number | 2 |
| Publication status | Published - 30 Dec 2017 |