The Impact Of The Manager's Reputation And Variance Investigations On The Creation Of Budget-making Slack

In many organizations budgets are an integral component of the management control system, and also are the management ways which are proved effective. There are many problems in the implement of budgets management, and budget slack is one of the most difficult problems. There are two kinds of budget slack, one is the slack when the budget is made, the other is the slack when the budget is executed. The slack in this study is the one when the budget is made, it is the manager's self-regard behavior. The manager tries his best to set the budget at a low level in order to finish the budget goal easily, in this situation the possibility of the appearance of budget slack is high.The agency theory is an important theory in the study of budget slack. However, the single-period agency theory model does not consider the future influence of current budget slack, so the findings between experimental research based on the single-period agency theory model and survey studies have differences. This study extends the single-period agency theory and joins two factors, which are the manager's reputation and variance investigations, uses an experimental setting to research the budget slack behavior of manager. The experimental data of 103 participants shows that the manager's reputation restrains markedly the degree of budget slack; It also shows that the survey of variance restrains the budget slack, but the effect is not significant.The results of this study extend the single-period agency theory model in theory and are useful in practice, for example, we should consider the long-term agency theory model when we make budget plan.