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International Journal of Applied Finance and Business Studies, Vol.1. No.1, (2013) 28–38, ISSN: 2338-3631

The Influence of Participation in Budgeting on Budgetary Slack with
Information Asymmetry as a Moderating Variable and Its Impact on the
Managerial Performance (A Study on Yayasan Pendidikan dan Koperasi in the
Province of Banten, Indonesia)
Karsam*
Student of Accounting Doctoral Program, Postgraduate Study, University of Padjadjaran Bandung, Indonesia

Keywords: Abstract: There are budgetary slack in the budgeting of Yayasan Pendidikan dan
Koperasi in the Province of Banten. The case was allegedly due to the information
Participatory budgeting asymmetry between the employer (the owner) and subordinate (manager) and the
presence of adverse selection, where the managers and other insiders know more
Information Asymmetry about agency prospects, and also because of the moral hazard in managers who
acted without the knowledge of the shareholders or owners of the company. Using
Managerial Performance
path analysis with partial least square (PLS), the answer of 93 people who are
drafting teams in the budget of each organization as respondents through
questionnaires. Results of data analysis show that the level of information
asymmetry in the correlation between participatory budgeting with budgetary slack
is 24%, the remaining 76% are other variables that are not described in this study.
To improve the effectiveness of the budget, the management should devolve
authority, evaluate and ensure that the budget drafting team have considered
thoroughly information asymmetry, as well as managerial performance measured in
determining planning and budgeting.

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1. INTRODUCTION
According to Yuhertiana [1], in a very strong paternal culture of government, an officer will be looking for ways to
"give something" to the subordinates. One way that can be done is to submit an excessive budget. In the behavioral
theory of the budget, this is known as the budgetary slack, i.e. the tendency to behave unproductively by overestimating
cost when an employee filed its budget. So it's not impossible to make fictitious SPJ (Letter of Accountability) and
budget mark-up will be even greater. In the field of accounting, planning stage has been of concern to some
researchers, especially in relation to issues of budgetary slack, and participatory budgeting [2, 3, 4]. Yuhertiana [4]
found that participatory budgeting was still apparent (pseudo). On the other hand, the budgetary slack is still found
quite often. Behavioral issue in the aspects of the ratification of the budget is very common with political nuance.
Conflict of interest between the executive and legislative often happens, a tough stage that causes delays in local
government budget (APBD) approval.
Many local government budgets in Indonesia, whose ratification been delayed, among others are Pemko Tanjung
Pinang (Sinar Harapan, January 31, 2009), Cimahi (www.pikiran-rakyat.com, December 31, 2008), Sumenep
(suarasurabaya.net, January 26, 2009). Even according to the Minister of the Internal Affairs, in 2008, only 22 of the 33
provinces provincial budget completed on time. (Pos Kota, October 29, 2008). Of course this causes disruption delay
ratification of the next budget process is more crucial, which embodies the realization of development programs for the
benefit of the people.
The above phenomenon is a condition that occurs in government agencies, and is also happening in the companies and
other public sector organizations in which the organization is implementing performance assessment based on the
achievement of the budget. Economic globalization is characterized by increasingly intense competition, forcing
managers to be able to improve and maintain performance in order to survive in the competition, so it requires an
evaluative tool subordinate manager which emphasizes on accounting performance measures [5]. Furthermore,

*Corresponding author: karsamse@gmail.com (Karsam)
28

Locke [22]. in the very emphasis on the operational aspects of accounting performance measures such as budget targets. although Kenis [8] and Milani [16] found it was not significant.773 million).261 million realization. revenue plan of Rp 65.1.565 million and Rp 40.703 million was realized for USD 46 959 million (no budgetary slack in revenues). Previously. Brownell and McInnes [15] found a significant correlation. showing the budgetary slack.1 No. In the year 2004/2005 revenue plan of Rp 43. Merchant and Manzoni [7]. while the cost plan of Rp 58. Several phenomena that occur as the sample is on Yayasan Pendidikan Swasta (Private Educational Foundation) in Tangerang who have implemented organizational performance assessment based on the budget that are made. in general there are 3 (three) categories of the labor theory of motivation: 1) Content Theories. 11. while the cost plan of Rp 47. employees have reason to be concerned about the budgetary basis of accounting [14].059 million realized for Rp 53.583 million was realized for 68 211 million (no budgetary slack in revenues). attitudes and behavior of members of the organization need to be involved in the preparation of budget management at a lower level [17]. Organizational behavior theory which was widely used in the design of the study was the theory of work motivation with his supporters. J. In the budgeting process as a nonprofit educational foundation. there is a performance evaluation tool based on the achievement of budget targets. These sizes can be said to be more objective and acceptable logically subordinate of the evaluation tools that put more emphasis on non-accounting measure.574 million was realized for Rp 56. they will try to create budgetary slack through the budgetary process [10.174 million). Revenue plan in fiscal year 2003/2004 amounted to Rp 39. The use of field studies to examine the correlation between budgetary participation and performance of employees. in contrast to the opinion of Baiman and Lewis [13]. 28-38 researchers in the field of management accounting suggests that budget emphasis according to Hirst [6]. in addition to the importance of cost control [8] as performance criteria or managerial performance. Since the 1970s. Karsam/Int. work motivation theory used in the development of the most dominant behavioral accounting research is Expectancy Theories and Attribution Theories. the planning system needs to be designed to leverage the laying focus on the real drivers of financial performance. In the year of 2006/2007. Process theory is a theory of motivation proposed by Vroom and Porter and Lawler.885 million (budgetary slack of Rp 4. while the cost plan of Rp 36.864 million (budgetary slack of Rp 5. Due to the suppression of the budget by superiors to subordinates. According to Dunk [9]. Therefore. whereas Contemporary Theories consist of Equity Theory and Attribution Theory. which is more focused on the factors that influences the cognitive processes someone to work as well as 3) Contemporary Theory. To prevent the impact of functional or dysfunctional. The budget that has been prepared to have a role as a planning and budget performance criteria are used as a control system for measuring managerial performance [11]. According to Luthans [20]. According to Mulyadi [23].185 million realized for 75 723 million (budgetary slack in 29 . 19]. ISSN: 2338-3631.363 million (budgetary slack in revenue of Rp 789 million). Therefore.363 million and the realization was Rp 29. of Applied Finance and Business Studies. 12]. the data retrieved from the years of 2003-2012. In the year of 2007/2008 revenue plan of Rp 75. the main argument for the agent (subordinate) is trying to create budgetary slack to get compensation in the future.104 million). So the budget emphasis in performance evaluations takes effect in creating budgetary slack [13].590 million (budgetary slack of Rp 2. budgetary slack in revenue here occurred Rp 696 million. Content Theories consist of Maslow's Hierarchy of Need. the competitive environment requires organizations to have a strong financial base to enable an organization to survive and grow. In the year of 2005/2006 revenue plan of Rp 55. while the cost plan was Rp 32. Behavioral accounting research in the field of management accounting is dominated by the two conceptual underpinnings of the behavioral theory of behavioral organizational and agency theory that are based on economics [18. 2013. another motivation theory also widely used in the study is Goal Theory proposed by Edwin A. Herzberg's Two-Factor Theory and Alderfer's ERG Theory. Rigway [14] more focused on accounting system that was often a source of information in assessing employee performance.010 million (budgetary slack of Rp 3. they are typically the main source of official information in business organizations. If the subordinate considers the award as the dependent variable in the budgeting. which gives the appearance of the problem of participation in the budgeting process. The big difference in the realization of the budget last year shows the level of success of participatory budgeting process. because the size of the non-accounting in practice tend to have difficulty in measurement because it is too subjective. of the various theories of motivation. many studies have raised issues about the motivational aspects in the design of management accounting.492 million). pp. organization paradigm as institutions is underlying wealth multiplier system design planning to enter the competitive business environment. 2) Process Theories (Expectancy Theories).114 million was realized for Rp 33. Vol. in determining the budget that will be used as an assessment of organizational performance and employees are always sticking to the report on the realization of years ago. which explains what a person's motivation in work.356 million was realized for Rp 41. Besides Expectancy Theories and Attribution Theories. According to Leslie Kren [21].

2 Participation in the Budgeting Process and Budgetary Slack Siegel and Marconi [30] stated that the participation of subordinates in the budgeting had a positive correlation with the achievement of organizational goals.929 million was realized for Rp 99.1.1. J. The results Onsi [34]. Karsam/Int. The research of Lowe and Shaw [10]. In 2011/2012 revenue plan of Rp 97.860 million (budgetary slack of Rp 5. concluded that there was no consistent evidence of a positive effect of participation on performance.854 million (budgetary slack of Rp 3. The results of studies that examined the correlation of participation with budgetary slack still showed conflicting results. and make submissions higher costs on the cost side. the manager of the agency must provide complete and accurate information that is useful in the budgeting process. In this case.270 million (budgetary slack of Rp 10 875 million). the results are conflicting. Merchant [24]. 2. In 2009/2010. In the year of 2008/2009 plan revenue of Rp 78 231 million was realized for 78 265 million (budgetary slack in revenue of Rp 34 million). pp.317 million). (2) studies that examine the correlation between participation in the performance.171 million was realized for Rp 77. revenue plan of Rp 83. 2. while the cost plan of Rp 70.1 Literature Review The increase or decrease in budgetary slack depends on the extent of accounting information in the budgeting up to the owner or top management as a principal. Young [31] and Lukka [28] in contrast 30 . In 2010/2011 revenue plan of Rp 89.846 million was realized for 99 226 million (no budgetary slack in revenues). with an overview at some of the following aspects. while the cost plan of Rp 75. This happens because the subordinate help provide personal information about future prospects so that budgets are prepared to be more accurate. staffing. Involvement of all causes both superiors and subordinates come to feel responsible for a common goal.686 million (no budgetary slack in revenues). [27]. such as: planning.1. so that it aligns with the vision and mission of the organization to achieve the performance expected by the company. Lukka [28] and Young [31] have been tested empirically that occurs because of budgetary slack subordinates provide biased information to superiors by reporting higher cost or lower reported earnings. managerial performance is the performance of the individual members of the organization in managerial activities.934 million was realized for Rp 68. subordinates will make an easier target to be achieved by making targets lower budget on the revenue side. Brownell [29] mentions two reasons.721 million). ISSN: 2338-3631.277 million was realized for 85 606 million (no budgetary slack in revenues).1 Participation in the Budgeting Process and Managerial Performance Results of study in the accounting literature related to the participation and performance of a strong positive relation [24]) until a negative correlation [25].1 No. supervision.857 million was realized for Rp 69. Influence of participatory budgeting on managerial performance is a key theme of interest in management accounting research [28]. LITERATURE REVIEW AND METHODOLOGY 2. while the cost plan of Rp 78. investigation. In accordance with agency theory. To make the information is not biased or information asymmetry occurs in accordance with agency theory. Vol. Merchant [24] and Dunk [33] showed that participation in budgeting could reduce budgetary slack. while the cost plan of Rp 104. namely: (1) participation is generally assessed with managerial approaches that can improve the performance of members of the organization. 2013. Locke and Schweiger [26]. high participation in budgeting process improves managerial performance. The difference between the reported budget with the budget in accordance with the best estimate for the company's so- called budgetary slack. Based on the background.275 million (budgetary slack of Rp 9. 28-38 revenue of Rp 538 million).213 million (budgetary slack of Rp 7.069 million). (3) The influence of budgetary slack on managerial performance. Meanwhile.145 million realized for Rp 59. According to Mahoney et al. coordination. namely: (1) The influence of participation in the budgeting on managerial performance. 2. Camman [32]. According to Brownell [29]. (2) The influence of participation in the budgeting on budgetary slack. while the cost plan of Rp 81. (4) The influence of information asymmetry on the correlation between participation in the budgeting with budgetary slack. the presence of subordinate participation in the budgeting process would reduce the propensity to create budgetary slack. negotiation and representation. Dunk [33]. of Applied Finance and Business Studies. because participation here is to involve all parties who are members of an organization. and Onsi [34]. the underlying problem in this research topic is budgetary slack and its impact on managerial performance on the Yayasan Pendidikan dan Koperasi in South Tangerang. Research conducted by Lowe and Shaw [10]. according to Camman [32]. so the hypothesis is developed: Ha1 = Participation in the budgeting process has a positive and significant impact on Managerial Performance. based on the review of the literature about organizational behavior.663 million was realized for 79.582 million).

Their results indicate that budgetary participation and budgetary slack has a positive correlation. otherwise the high budgetary slack will be easily achieved by the managers involved in the preparation of the budget. J. In addition.1. and Dunk. He stated that the information asymmetry will negatively affect the correlation between participation and budgetary slack. pp. Information asymmetry is a condition when the owner/boss does not have enough information about the performance of agents/subordinates so that the superiors cannot determine the contribution of subordinates to the actual results of the company. 2. the principal (owner/boss) who gives authority to the agent (manager/subordinate) to set up company being owned. for planning purposes. the higher the participation the higher the budgetary slack will be. 2013. so the managerial performance seems to increase. However. Anthony and Govindarajan [38] state that the condition of information asymmetry appears in agency theory (agency theory). thus allowing management top-level information on environmental issues and technology.1. Findings indicate inconsistencies between the studies by other research. including local and personal information. have beneficial effects in at least two things: First. 2. Vol. especially if the assessment manager is determined based on the achievement of performance budget. for example in comparing with their superiors. subordinates who participated in the preparation of the budget will make budgetary slack. so if the boss (the principal) just use the budget as a performance assessment of subordinates. the reported budget should be the same as the expected performance. then the individual will be representing a budgetary slack to be easily achieved. the process of participation in organizations reduce information asymmetry. The results of Young [31] and Merchant [24] pointed out that because of the desire to avoid risk. 28-38 to a study conducted by Onsi. suggests the possibility of other variables that affect the correlation between budgetary participation and budgetary slack. Accounting researchers found that budgetary slack was influenced by several factors including the subordinate participation in the preparation of the budget [35]. or they better understand the technical operation in more detail. has a diverse product and technology needed. Ghozali [36] said the possibility of the lack of unity of research results and their implications on the budget. This includes persons involved in the budgeting process and that have favorable information [11]. namely: a very large company has spread geographically.4 Information Asymmetry and the Correlation of Participation in the Budgeting with the Budgetary Slack Information asymmetry has been selected as a moderator variable in this study. Govindaradjan [37] states that the difference in the results of these studies can be completed through a contingency approach. Slack low budget so it will be difficult to achieve managerial performance will look bad by the principal. Furthermore.3 Budgetary Slack and Managerial Performance In accordance with Onsi [34] budgetary slack can be made by a person who prepares the budget.1. so to avoid the risk of a poor assessment of the individuals involved. Environmental uncertainty can cause subordinates to the field of technical information beyond the information possessed by their superiors. According to Schiff and Lewin [11]. the process of participation can result in a greater commitment from lower level management to implement the budget plan and meet your budget. from the lower-level managers who have specialized knowledge. This work is done by determining the income is too low (understated) and the cost is too high (overstated). The hypothesis is developed as follows: Ha2 = Participation in the budgeting has a positive and significant impact on budgetary slack. The higher the risk. subordinates may master the more important information. and the subordinate will create budgetary slack as influenced by desire and self-interest that will facilitate the achievement of budget targets. Shields and Young [18] suggest a number of conditions that are likely onset company information asymmetry.1 No. Studies that examine the correlation of participation in budgetary slack still showed conflicting results. subordinates engaged in the preparation of the budget tending to perform budgetary slack. i. then subordinates take the opportunity of participation budgeting. Second. because the subordinates have better information than the supervisor (there is information asymmetry). Dunk [33] examined the influence of information asymmetry on the correlation between participation and budgetary slack. Information Asymmetry means that subordinates have more information to make decisions in budgeting than their superiors [21]. Similar opinion was also expressed by Dunk [33] who defines information asymmetry as a situation when subordinates exceeds the information possessed by superiors. ISSN: 2338-3631. due to certain factors (situational factors) or better known as contingency variables. He gave biased information from their 31 . Individuals who are involved in the budgeting process become much aware of information relating to matters relating to the preparation of the budget. Welsch et al in Young [18] suggest the presence of budgetary participation of middle managers and lower-level budgeting process.e. Camman. thus the hypothesis is developed as follows: Ha3 = budgetary slack has a negative and significant influence on managerial performance. Young [31] and Merchant [24] had tested empirically that occurs because of budgetary slack subordinates provide biased information to superiors by reporting higher cost or lower reported earnings. Karsam/Int. Merchant. of Applied Finance and Business Studies.

which had been also widely used among others by Brownell and Mclnnes [15].2. 2013. The variables used in this study are budgetary slack as the dependent variable (Y1) and participation in the budgeting (participatory budgeting) (X 1) and information asymmetry (X2) as a moderating variable coupled with managerial performance variable (Z 1). (2) changes.1. that is an attitude towards the division of control systems described by the subordinate attitudinal variables. budgetary autonomy and supervision of the use of the budget. prior research participation involvement in budgeting [19. (3) Superiors and Subordinates Have Same Information. the institutional slack explained by variables that make managers tend to reduce budgetary slack. Measurement of these variables consist of 6 (six) questions using a Likert scale of one to seven. Frucot and Shearon [41]. HA4 = Information Asymmetry significantly influences the correlation between participation in budgeting and budgetary slack. Data were collected by sending questionnaires by email and delivered directly to the manager who led the 200 people in the functional departments of Yayasan Pendidikan dan Koperasi in Banten. According to Belkoui [47]. manipulative attitude described by variables indicating managers in creating and utilizing budgetary slack. J. although using different things in measure 6 dimensions based on the premise that represented one factor. Questionnaires were distributed three times with the amount of data that was 200 samples managers both upper-lower level. (2) each unit is a center of investment. Vol. the higher the probability of participation in the preparation of the budget implemented so that budgetary slack is very high. that is the condition that occurs due to differences in the amount of the budget submitted by subordinates with the best estimate of the number of organizations. and (5) Discussion. the dimensions of budgetary slack is grouped into 8 categories: (1) Slack Attitude.1 Participation in Budgeting (X1) In measuring the first independent variable (X1). The object of this study is to investigate the influence of the correlation of participation in budgeting (participatory budgeting) with budgetary slack that are moderated by the information asymmetry and its impact on managerial performance in Yayasan Pendidikan dan Koperasi in the Banten Province. the lower the likelihood of participation in budget formulation. With the exception of Hassel and Cunningham [42]. 28-38 personal information. The information gap can be reduced by exclusion of managers in decision making. Previous studies. ISSN: 2338-3631. a questionnaire developed by Milani [16] was used. (5) Attitude toward the top management control system. 2.2.2 Information Asymmetry (X2) The second independent variable (X2) in this study is information asymmetry in which executive managers have more accurate information about the responsibilities than the unit supervisor.2 Methodology The present study used a descriptive method of verification with Explanatory Survey approach. which had budgetary responsibility. Dimensions developed by Dunk [33] are: (1) Superiors Have More Information. of Applied Finance and Business Studies. This is further corroborated by Christensen's study [39] and Pope [40] which reveal that participation in budgeting. (3) each manager must occupy the position for at least two years in the business unit. Measurement of these variables consist of 6 (six) questions using a Likert scale of one to seven. This variable was measured using a questionnaire developed by Anthony and Govindaradjan [38]. because most researchers used this dimension as one of the factors to determine the information asymmetry. 2. which can lead to budgetary slack. budget report was below expected performance). 2. (4) Influence. the detection of slack explained by variables that indicate and demonstrate superior ability to detect budgetary slack based on the information received. Associate Manager and Executive Manager. The present study hypothesized that the greater the degree of information asymmetry. 43. otherwise the lower level of the information gap. resource pressures. that is the 32 . (4) Detection.2. Respondents were selected based on the following criteria: (1) each respondent should have budgetary responsibilities in each business unit. (7) Attitudes towards the budget. and according to Robin [46] (4) Perception of Information. that is an attitude toward top management control systems described by variables that showed an authoritarian philosophy in the budget-making caused by the top management division manager. 44. 33.e. (3) satisfaction. whose most employees were in position of a Senior Manager. by creating a budget that was relatively easy to achieve. pp. This variable was measured using a questionnaire developed by Dunk [33]. Dimensions which were developed by Milani [16] were: (1) Contributions. subordinates can hide some of their personal information. 2. the information gap between superiors and subordinates can lead to gaps in information. which is an attitude towards the slack that is explained by variables that indicate the attitude of the manager to make use of budgetary slack. 45] used the 6- dimensional cultivated by Milani [16].3 Budgetary Slack (Y1) The first dependent variable (Y1) in this study is budgetary slack. (3) Slack Institutionalization. (2) Slack Manipulation. the higher the information gap. Karsam/Int. so there was budgetary slack (i. (2) Subordinates Have More Information. resulting in very low budgetary slack. (6) Attitudes toward the divisional control system.1 No. From the point of view of agency theory.

but it can also be used to clarify whether there is any correlation between the latent variables. ζ = Zetta . (6) Selection of staff. 48]. both latent variables (unobserved) and the observed. PLS is a powerful method of analysis because it is not based on a lot of assumptions based. using Partial Least Square (PLS) first developed by Wold as a general method for estimating path models using latent constructs with multiple indicators. (3) Coordination. (5) Budget Efficiency. (4 ) Budget Emphasis. ξ = Xi. (7) the negotiation process. (2) Process of Investigation. Specification notation on the model : ɣ = Gamma. (5) Supervision. 28-38 attitude toward the budget outlined by the variable attitudes toward standard levels. with the following equation: η = γ1 ξ1 + γ2 ξ2 + γ3 ξ3 + γ4 ξ1*ξ3 + + γ5 ξ2*ξ3 + ζ (1) 33 . namely: (1) Budget Standards. Respondents answered their performance using a Likert 7 point scale (1 = below average. (3) Tight Budget. To answer the research questions of the present study. Instruments for measuring managerial performance variables in this study were self-rating instrument developed by Mahoney et al.1. suggesting exogenous (independent). 2. covariance or correlation relationships between the exogenous variables (Independent) η = Eta. a regression coefficient between the latent variable (construct) exogenous with endogenous latent variable. managers and attitude (positive or negative) of the budgeting system in general. which uses six instruments. Although PLS can also be used to confirm the theory. until the ratio can be used on the same model). both latent variables (unobserved) and the observed. of Applied Finance and Business Studies. Structural Equation Models with Path Analysis. This measure has been used by the main researcher [29. 2013. Karsam/Int. ordinal. the sample does not have to be large. 50]. the authors use the dimensions of Dunk [33] because it is more focused on the ease of budget targets that can be achieved.4 Managerial Performance (Z1) The second dependent variable (Z1) in this study is the managerial performance that is a management process designed to link organizational goals with individual goals such that both individual goals and corporate objectives can be met. (8) Budget relevancy. a regression residual error for each endogenous variable that shows the composite error of the model. J. 33. (8) Representation. as a tool for managers. (4) Evaluation. Vol. (2) Achievement of Budget.1 No. interval. [27]. ISSN: 2338-3631. In this study. As stated by Wold in Imam Ghazali [36]. Models in this study are in accordance with the framework established researchers can be described as follows: Figure 1:.2. shows endogenous variable (dependent). pp. φ = Phi. that is explained by the variable relevance budget manager attitudes towards the relevance of operational standards department. Data does not have the multivariate normal distribution (with scale indicator categories. attitudes towards the achievement of the budget for the relevance of performance appraisal. 7 = above average). (6) Target Budget. Brownell [15]reported that an independent assessment of the reliability and validity of the instruments Mahoney has provided evidence to support the ballot measure progress [49. γ1 = coefficient of correlation between ξ1 (composite exogenous1) and η (composite endogenous) γ2 = coefficient of correlation between ξ2 (composite exogenous2) and η (composite endogenous) γ3 = coefficient of correlation between ξ3 (composite exogenous3) and η (composite endogenous) γ4 = coefficient of correlation between ξ1*ξ3 (composite exogenous1* Exogenous3) with η (composite endogenous) Tools used to analyze the structural model with path analysis above is the program Smart-PLS (Partial Least Square). Using an average of 9 dimensions which can be measured by adjusting Mahoney et. There is a measurement model that is the measurement model composite exogenous variable correlation with endogenous composite.al [27] to evaluate managerial performance with 7 point Likert scale: (1) Planning.

965 significance of Performance) 5% (>1.083 -0. 28-38 3. Reliability test in this study used the One Shot test.049 0. thus it can be concluded that the instrument items for each variable were reliable Nunnally in Ghozali [36].5% while the remaining 53. measuring the correlation between the answers to questions.1 No. 2012. Research data were collected and processed to test the quality of the data in the form of validity and reliability tests.96) lv4 (Interaction between Influence PA and AI) -> lv1 1.1.864 0. Until the deadline for the return of the date of June 30.092 1. 2012. RESULTS AND DISCUSSION Research data used in this study was primary data obtained using questionnaires that had been sent directly to the compilers of the budget that was the Chairman of Yayasan Pendidikan dan Koperasi.60. of Applied Finance and Business Studies. 2013. Karsam/Int. as follows: Figure 2: Correlation Model Smart-PLS Output Table 1: Coefficient of Each Line Relations Variable mean original of Standard T- sample Note subsa deviation Statistic estimate mples lv0 (Participatory No Influence Budgeting) -> lv1 -0.658 0. pp. The rate of return (response rate) obtained was 46.729 0.125 0.548 2. Thus it can be interpreted that any item indicator instrument is valid for budgetary slack. Reliability test results of the calculations show that the value of Cronbach Alpha (α) for each variable is greater than 0. budgetary slack (Y1). J.209 1.404 2. meaning that only one measurement and then the results were compared with other questions or in other words.097 -0. Validity test was conducted with the help of Smart PLS program shows that the level of AVE (average Variance Extracted) for each item statement items with a total score of managerial performance variables (Z1). Vol. The hypothesis was tested with the help of Smart-PLS in accordance with the model in this study. 93 questionnaires were returned and 117 questionnaires were not returned.56) lv1 (Budgetary Slack) -> Influence lv2 (Managerial -0. and information asymmetry (X2) is significant at the 0.667 0.940 -0. The rate of return was relatively low due to the deployment and retrieval of the questionnaire was done by directly delivered and picked up.327 significance of (Budgetary Slack) 5% (>1.96) 34 . Chief Operating and Financial Managers of Yayasan Pendidikan dan Koperasi domicile in Banten Province on December May 5. of the 200 questionnaires distributed.96) lv0 (Partisipasi Anggaran) Influence -> lv2 (Managerial 0.01 level.204 significance of (Budgetary Slack) 5% (>1.819 significance of Performance) 1% (>2. participation in the budgeting (X1).349 (Budgetary Slack) lv3 (Information Influence Asymmetry) -> lv1 -0. ISSN: 2338-3631.5% did not return.076 8.238 0.

2. where the results of their research stated that participation in the preparation of budgets and budgetary slack has a positive correlation or the increasing participation in the preparation of the budget will increase budgetary slack according to the alternative hypothesis (Ha2). 2013. Influence of Participation in Budgeting (X1) on Budgetary Slack (Y1) Influence of Participation in Budgeting (X1) on Budgetary Slack (Y1) has a negative regression coefficient of -0083.58.96. Camman [32]. instead of high budgetary slack will be easily achieved by the managers involved in the preparation of the budget. if the composite showed Influence Participation In Budgeting (X1) is increased by 1 unit. The results support the research that has been conducted by Schiff and Lewin [11] that subordinates will create budgetary slack because it is influenced by the desires and personal interests that will facilitate the achievement of the budget.667. Negative coefficient means that the correlation is reversed. with a high 35 . Z-value calculated Budgetary Slack (Y1) to construct Managerial Performance (Z1) of 1. Managerial Performance (Z1) will increase by 0.667 units to record other variables constant/fixed. It shows that the influence of positive interaction and this means that it rejects H0 and accepts Ha4 (alternative hypothesis) where Ha4: Information Asymmetry significantly affects the correlation of participation in budget formulation with budgetary slack. and reject Ha (alternative hypothesis) or in other words Participation In Budgeting (X1) has no direct influence on Budgetary Slack (Y1). J. thus it appears to increase managerial performance. especially if the performance appraisal managers (managerial performance) is determined based on the achievement of the budget. or in other words that the influence of participation in the preparation of the budget budgetary slack is reinforced by information asymmetry. 3.4 Influence of Participation in Budgeting (X1) on Budgetary Slack (Y1) with Information Asymmetry (X2) as Moderating Variable Influence of Participation in Budgeting (X1) on Budgetary Slack (Y1) with Information Asymmetry (X2) as a moderating variable has a regression coefficient of 1. if the composite showed Influence Participation In Budgeting (X 1) is increased by 1 unit. Influence of Participation in Budgeting (X1) on Managerial Performance (Z1) Influence of Participation in Budgeting (X1) on Managerial Performance (Z1) has a positive regression coefficient of 0. This is consistent with the results of Merchant [7] and Brownell [15] which showed that participation in budgeting can improve managerial performance. Managerial Performance (Z1) will decrease by 0.965 and greater than z-score (z-table) with a significance level of 5% or 1.204 and larger Z-table by 1. This means that reject H 0 and accept Ha3 (alternative hypothesis). 3. if the composite shows budgetary slack (Y1) is increased by 1 unit.) So that the null hypothesis (H 0) is rejected or Ha1 is accepted or in other words Participation In Budgeting (X 1) directly influences the Managerial Performance (Z1). A positive influence with a significance level of 5% where the Z-count shows the number 2. ISSN: 2338-3631. Although results vary by research Cherington and Cherington [25].) So that the null hypothesis (H 0) cannot be rejected or accepted. 3. Budgetary Slack (Y1) will decrease by 0. pp. but is not significant because the value of z-count Influence Participation In Budgeting (X1) to construct Budgetary Slack (Y1) of 0.96. and significant because the value of z-count Influence of Participation In Budgeting (X1) to construct Managerial Performance (Z1) of 8819 is greater than the z-score (z-table) at a rate of 1% significance (or of 2. of Applied Finance and Business Studies. This result is likely due to other variables that affect the correlation of participation in budget formulation with slack budget in accordance with the opinion of Ghazali [36] and Govindaradjan [37] which stated that there were certain factors (situational factors) or better known as contingency variables. In other words. or in other words that the Budgetary Slack (Y 1) directly influences the Managerial Performance (Z1). In other words.209. but here shows that the involvement of all parties causing both superiors and subordinates come to feel responsible for a common goal. Karsam/Int. or in other words if the budget is not going making budgetary slack so it will be difficult to achieve managerial performance will be assessed by the principal look bad.3 Influence of Budgetary Slack (Y1) on Managerial Performance (Z1) Influence of Budgetary Slack (Y1) on Managerial Performance (Z1) has a negative regression coefficient of -0097.1 No. Young [31] and Lukka [28].097 units with records of other variables constant/fixed. Merchant [7] and Dunk [33]. because according to Brownell [15] participation is generally assessed with managerial approaches that can improve the performance of members of an organization in which participation high in the preparation of the budget will improve the performance here means that participation means involving all the parties who are members of an organization. which suggest that participation in budgeting can reduce budgetary slack.1.1.96. and with different results Lowe and Shaw [10]. 28-38 3. so that it aligns with the vision and mission of the organization to achieve the performance expected by the organization. This is not in accordance with the results of the study by Onsi [34]. In other words.083 units with records of other variables constant/fixed.349 is smaller than the z-score (z-table) on significance rate of 5% (or by 1. thus Ha1 is rejected because apparently the result of regression coefficient is negative but not significant because the z-count smaller than the z-table. Negative coefficient means that the correlation is reversed. Vol.

subordinates can hide some of their personal information. 4. CONCLUSIONS AND LIMITATIONS OF STUDY 4. according to Ghozali [36] 0:30 ± R2 difference is quite strong.. of Applied Finance and Business Studies.6%. pp.6 Budgetary Slack (Y1) That the construct of Participation in Budgeting (X1) and the Influence of Information Asymmetry (X2) and the interaction between them (moderating effects) can explain the budgetary slack by 24% or in other words 76% is explained by other variables that are not included in the study. thus the returned questionnaires are not distributed on time. (2) perceptions of respondents who submitted in writing to the shape of the questionnaire instrument may affect the validity of the results. ISSN: 2338-3631. but according to the research of Christensen [39].396 lv3 (Information Asymmetry) lv4 (Interaction between PA and AI) 3. or in other words.2 Limitations of Study This study has several limitations or drawbacks.240 0.. J. 59.1 Conclusions Based on the results of research conducted to determine the influence of participation in the budgeting on budgetary slack with the information asymmetry as moderating variable and its impact on managerial performance. there are many other limitations which are not recognized by the researcher. 2013. Limitations in this study are expected to be addressed by subsequent researchers.4% is explained by other variables that are not included in the study. 36 . The results are inconsistent with research Dunk [9]. It is known from the difference in the value of R2 (R Square) of the existing and no moderating influence of budget emphasis 0:33 (0240-0207) because.396 0. (1) the difficulties to control respondents. as well as the discussion that has been described previously.5 Coefficient of Determination Table 2: Coefficient of Determination R-square with R-square without Indicator moderating moderating lv0 (Participatory Budgeting) lv1 (Budgetary Slack) 0. then the inference can be drawn as follows: (1) Information asymmetry has a significant positive influence on the correlation of participation in the budgeting with budgetary slack (2) Participation in the budgeting has a significant positive influence on managerial performance (3) Budgetary slack has significant negative influence on managerial performance. who guides the author in writing this article of accounting research. Ak.1. ACKNOWLEDGEMENT I express my gratitude to Dr.1 No. 3. he stated that the information asymmetry will negatively affect the correlation between participation in budgeting and budgetary slack. 28-38 level of moderation. Karsam/Int. (3) in addition to these limitations. Vol. Pope [40] which revealed that the participatory budgeting. which can lead to budgetary slack..7 Managerial Performance (Z1) That the construct of Participation in Budgeting (X1) and the Influence of Information Asymmetry (X2) and the interaction between them (moderating effects) can explain Managerial Performance by 39. 4. MS. 3. SE.207 lv2 (Managerial Performance) 0. Tettet Fitrijanti.

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