HAROLD T. LITTLE JR, for the Doctor of Business Administration degree in
ACCOUNTANCY, presented on December 11, 1998, at Southern Illinois University at
Carbondale.
TITLE: THE EFFECTS OF CHARACTERISTICS OF A FORMAL BUDGETING
PROCESS AND SUPERVISORS’ BUDGET-RELATED BEHAVIORS ON
MANAGERS’ ORGANIZATIONAL ATTITUDES AND BEHAVIORS
MAJOR PROFESSOR: Dr. Robert B. Welker
Prior accounting research has extensively studied how the budgeting behaviors of
supervisors (e.g., extent of budgetaiy participation allowed) affect subordinate managers’
organizational attitudes and behaviors (e.g., organizational commitment, managerial
performance). Only a few studies, however, have examined the effects that
characteristics of a formal budgeting process have on managers. Companies may be
implementing formal budgeting procedures (e.g., use of a budget manual and preparation
of mandatory reports) without understanding the consequences of these procedures on
managers’ organizational attitudes and behaviors. The purpose of this study is to
determine whether characteristics of a formal budgeting process affect managers’
organizational attitudes and behaviors either directly or indirectly through their effects on
supervisors’ budget-related behaviors.
Three sets of hypotheses are tested. The first set of hypotheses is concerned with
the direct relationship between supervisors’ budget-related behaviors and managers’
organizational attitudes and behaviors. Supervisors’ budget-related behaviors are those
supervisor-initiated activities, actions, and interactions with subordinates which occur on
a regular basis and are related to the system of budgetary controls (Swieringa and Moncur
1972). The second set of hypotheses is concerned with the relationship between
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characteristics of a formal budgeting process and supervisors’ budget-related behaviors.
Characteristics of a formal budgeting process are formalized and standardized activities
created for the purpose of structuring, monitoring, and controlling the preparation and use
of budgets (Welker and Magner 1994). The third set of hypotheses is concerned with the
direct relationship between characteristics of a formal budgeting process and managers’
organizational attitudes and behaviors after controlling for supervisors’ budget-related
behaviors.
Questionnaire data were gathered from managers at 154 companies and analyzed
with multiple regression. Mixed support was found for relationships between
supervisors’ budget-related behaviors and managers’ organizational attitudes and
behaviors. Proposed relationships between characteristics of a formal budgeting process
and supervisors’ budget-related behaviors were generally not supported. Direct effects of
characteristics of a formal budgeting process on managers’ organizational attitudes and
behaviors were not supported. The general conclusion of the study is that procedural
characteristics of a formal budgeting process have at most a modest effect on managers’
organizational attitudes and behaviors.
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