Top management characteristics and comprehensive focus on budgeting

Lili-Anne Kihn and Eva Ström

Journal of Applied Accounting Research, 2023, vol. 26, issue 6, 223-243

Abstract: Purpose - This study examines how the strong emphasis placed on the purposes of budgeting, referring to a comprehensive focus on budgeting, is related to top managers' education and tenure while controlling for their functional positions in their respective firms and ages, as well as several company-specific predictors (information quality, firm size, information technology, importance of profit and strategy). Design/methodology/approach - Survey data were collected from senior managers of large manufacturing firms in Finland and Sweden. Findings - The results suggest that academic business education is positively associated with a comprehensive focus on budgeting, but tenure as well as functional position in the company (Chief Financial Officer (CFO) or not) and age are not. Overall, the company-specific control variables in general and information quality in particular are shown to have greater explanatory power than the top management characteristics analyzed. Research limitations/implications - This study identifies several empirically supported factors that seem to contribute to a comprehensive focus on budgeting. The effects of information quality, business education, the importance of profit and firm size could be considered in future research. Practical implications - Academic business education matters more than the other top management characteristics analyzed. If organizations want to make comprehensive use of budgets, they should employ business graduates and be mindful of company-specific variables. Originality/value - This study is the first to address a comprehensive focus on budgeting and some of its determinants. Future research could investigate a broader set of such determinants in different contexts.

Keywords: Budgeting; Business education; Management accounting; Survey; Tenure; Upper echelons (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:jaar-02-2023-0036

DOI: 10.1108/JAAR-02-2023-0036

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