Title
The Robustness of Honesty Effects on Budget Proposals when the Superior has Rejection Authority
Document Type
Article
Publication Date
2015
Abstract
Rankin, Schwartz, and Young (2008) find experimental evidence that manipulating whether the budget request of the subordinate requires a factual assertion has no effect on budgetary slack when the superior can reject the budget. This calls into question the role of honesty in participative budgeting settings. Using Rankin et al.'s (2008) manipulation to capture honesty effects, we examine the robustness of honesty effects on budget proposals when the superior has rejection authority in two experiments. In Experiment 1, we document that honesty has a strong effect on budgetary slack when the salience of distributional fairness is reduced by withholding the relative pay of the superior from the subordinate. In Experiment 2, we document that honesty continues to have a strong effect on budgetary slack when the salience of reciprocity is increased by giving the superior the ability to set the subordinate's salary. Thus, our evidence suggests that honesty effects on budget proposals are generally robust to giving the superior rejection authority. Our study helps explain prior experimental results and clarifies the role of honesty in participative budgeting settings.
Recommended Citation
Douthit J, Stevens D. The Robustness of Honesty Effects on Budget Proposals when the Superior has Rejection Authority. The Accounting Review. March 2015;90(2):467-493.
Comments
Originally published in:
Douthit J, Stevens D. The Robustness of Honesty Effects on Budget Proposals when the Superior has Rejection Authority. The Accounting Review. March 2015;90(2):467-493. DOI: 10.2308/accr-50937.
(c) American Accounting Association. Posted with permission.