The Empirical Study On The Relationship Of Agency Cost, Budgetary Slack And Performance

Budgetary slack is a problem that budget management often appears. Budget management is a systematic engineering. It includes budgetary preparation, approval, implementation, adjustment and so on .Good budgetary preparation is a prerequisite for the sound and science to insure budget. From the link of budgetary preparation, this paper focus on the budgeting slack by manager in listed company. Based on literature review related to this article both at home and abroad, we know that information asymmetry, budgetary participation and other factors lead to budgetary slack. In this paper,we mainly study agency cost that have influence on budgeting slack by manager .Analysis the reason of budgetary slack with a view to find out the outcome of budgeting slack by manager. We reduce harmful budgetary slack to budget management play an active role in the enterprise management control.The agency theory and the contingency theory can explain the reason of budgeting slack. This paper focus on the budgetary slack on the basis of the agency theory, this part has two sides. First, studied agency cost is how to affect budgeting slack by manager. And set up multiple linear regressions model, under control over the affect of the contingency theory and other related factors. Second, on the basis of the agency theory, this part mainly studies the relationship between budgeting slack and performance by using multiple linear regressions model. In this paper, with the study of the two cities listed companies in Shanghai and Shenzhen A-share market, select the relevant data for 2006-2008, the composition of panel data, using SPSS statistical software to empirical analysis.Empirical results show that a significant positive correlation between the cost of agent and budgeting slack by manager in listed company. Based on agency theory, there is a significant negative relationship between budgeting slack and performance. That is to say, agency cost could have important impact on budgeting slack by Manager in listed company that caused harmful budgeting slack. Final on the basis of empirical analysis, gave some corresponding suggestions.