Study On The Formation Mechanism Of Budgetary Slack And Economic Consequences Based On The Entrenchment Effect

The budget management is an important means of enterprise control,whether in the financial management of enterprises,or at the level of corporate governance,has been highly valued by the academic and practical circles.However,from the perspective of domestic and international budget management experience,there are a lot of controversy about the effect of budget management,budget slack is one of them.Currently,the domestic research on budget slack focused on budget slack middle management and grass-roots management,research on top management is less,and most of them do not produce and its impact on the company’s common features from the budget executor position of budget slack.This paper takes 2011-2015 years of voluntary disclosure of listed companies as the research budget data the object,through the normative research and empirical research methods,formation mechanism study of budgetary slack and influence on the performance of the company.This paper for further improvement and perfection of the budget management system,it is important to solve the problem of budget slack.This paper is divided into six chapters: Chapter I is the introduction.It mainly introduces the background,significance and related concepts,this paper puts forward the research ideas and the main content,elaborated the innovation and the research methods of this paper.Chapter II is the literature review.The study on the influence factors and economic consequences of domestic and foreign budget relaxation,and has carried on the literature review.Chapter III is the theoretical basis and analysis.Based on the principal-agent theory and contingency theory,from the perspective of executive entrenchment effect,analyze the causes of budgetary slack.Chapter IV is the empirical study of the formation mechanism.Based on the panel data model,discussed executive power,ownership concentration and impact of property right on budget slack.Chapter V,is the empirical research on the economic consequences of the basic research.In the last chapter,based on the panel threshold model,tries to objectively control interval The classification method,the nonlinear relationship between the tip of budget slack and corporate performance,and further analysis of the entrenchment effect under the influence of budgetary slack on the performance of the company.Chapter VI is the conclusion and suggestions.According to the research conclusion of the first two chapters,this paper draws the conclusions of the study and puts forward the corresponding suggestions.The conclusion of this study found that: 1)the executive power,ownership concentration and property rights is an important factor of budget slack.Specifically,the executive power of large state-owned enterprises,dispersed ownership,executives for job security considerations,tend to build entrenchment effect,reducing the risk of less change,thereby reducing the probability of in the budget slack;executive power is small,concentrated ownership of state-owned enterprises,executives in order to obtain good performance evaluation and higher returns,more inclined to develop loose budget.2)budget slack and corporate performance presents the first weakly nonlinear relationship strong and then weakened.Although the budget slack caused a negative impact to the company,but its positive role can not be ignored.Appropriate budgetary slack can not only alleviate the problem before the interests of managers and shareholders,but also can effectively deal with the risks of environmental uncertainty which factors,and achieve win-win situation.