Budgetary Slack:An Empirical Research Based On Managerial Ability And Management Tenure

Budget management plays an important role in the enterprise in internal management control, Hansen(2003) argues that it is almost the foundation of all the organization in the management control, however, how effectively to play the role of budget in enterprise management, has always been the main content of management control research. That is to say, it may have all kinds of reasons that make it difficulty for budget to play its role; this paper argues that one of the forms of budget opportunistic: budgetary slack is one of the important influencing factors; it will greatly inhibit its role in budget management. The optimization function of the budget management of the enterprise is being weakened, even completely lost its proper function. Many scholars query to the function of budget, thus created some questions.By Hambrick and Mason(1984) put forward to the upper echelon of theory argues that the cognitive structure of different managers and values are different, this will make it to the interpretation of the relevant information is different. Managers, in short, the characteristic of the managers’ impact corporate strategy choice and further affects the behavior of the enterprise. This article is from the management ability and management tenure characteristics of the two manager’s latitude to study the impact on the budget slack. The stronger the ability of the managers has more social resources and the ability to handle complex things, but also has better psychological self-interest and the opportunism behavior. This paper points out that in the case of other conditions accordance, the stronger the ability of the managers, the more inclined to make budget slack.Budget slack is the manager’s opportunism behavior, and this behavior will be influenced by the manager’s ability, but the length of the person in charge of the budget has also has effect on the budget slack. Nowadays, lots of researchers also divide the management tenure into actual tenure and the expected tenure. The years which managers have tenured is called actual tenure. Expected tenure is the estimate of the future tenure. Researchers believe that there could be a turning point in the longer term. Before this turning point, because the manager has a strong desire to achieve personal wealth and a sense of achievement, so as the extension of both the presidency and the accumulation of experience and ability to improve, reduce the degree of budget slack. Instead, after the inflection point, with the extension of the actual tenure of the managers, the managers will gradually show the bad psychological and behavior characteristics, thus the budgetary slack degree will be heighten. This paper points that in the case of other conditions all accordance, managers actual tenure and budget slack is u-shaped relationship, managers expected tenure and budget slack is positively correlated relationship, and carry on empirical research.In this paper, with reference to Demerjian(2012) put forward to the DEA method, we use two stages to calculated management ability. Reference Antia et al.(2010): divided into tenure latitude and age latitude to calculate the expected tenure. We collect the three year’s(2012—2014) data such as total assets, sales, costs, ROE through CSMAR. We get the revenue’s budget number through browsing three years’(2012—2014) annual report. Those annual report are from http://www.cninfo.com.cn/. In the end, we mainly use excel(2010) and stata12.0 to conducting the statistical analysis, use stata12.0 to conducting the regression, White Test and Pearson autocorrelation test.