Exploring the Consequences of Competing Uses of Budgets

Jean‐François Henri, Steeve Massicotte and Dominique Arbour

Australian Accounting Review, 2020, vol. 30, issue 4, 257-268

Abstract: The purpose of this paper is to revisit the impact of budgets within organisations by combining the notions of simultaneity and tension between budget uses and by introducing the notion of predominance. More specifically, we first intend to empirically examine the combination of budget uses in an organisational setting. Second, our aim is to examine to what extent the simultaneous use of budgets for the purpose of performance evaluation or forecasting gives rise to satisfactory or unsatisfactory consequences of budgets. Using survey data collected from a large sample of manufacturing firms, the results suggest that more satisfactory budget consequences, in terms of budget value, arise in two situations: (a) whereby budgets are predominately used for performance evaluation, or (b) whereby budgets are predominately used for forecasting. Those firms displaying no predominant budget use show less satisfactory budget consequences.

Date: 2020
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