This study investigates the impact of participative strategic planning on managers' creation of budgetary slack. Specifically, we draw on self-determination and organisational commitment theory to examine whether and how the degree of managerial participation in strategic planning relates to the creation of budgetary slack. The hypotheses are empirically tested with survey data obtained from 247 managers in a cross-section of West-European organisations. The results from a structural equation model, with controls for budget participation and slack detection, suggest that increased participation in strategic planning leads to lower budgetary slack creation through the suggested path of heightened affective organisational commitment. In addition, the results indicate that budget participation decreases the creation of budgetary slack through the mediating effect of autonomous budget motivation, suggesting that both elements of the organisational planning process are related to the creation of budgetary slack. Our study contributes to the growing research exploring the interface between accounting and strategy by recognizing the importance of participative strategic planning for understanding managers' creation of budgetary slack.
Duarte, Fabio Dias; Gama, Ana Paula Matias; Gulamhussen, Azzim (Springer, 2018)
We investigate the role of (business) collateral and (personal) guarantees alongside small and medium enterprise (SME), lending bank and loan characteristics, macroeconomic conditions, sectors, and geographic locations while controlling for unobserved time effects in predicting default at the peak of the financial crisis. First, we find a positive relation between collateral and default, and a negative relation between guarantees and default. Second, we find a negative relation between the joint influence of collateral and high credit score, and a positive relation between the joint influence of collateral and low credit score and default. We also find a negative relation between the joint influence of guarantees and high credit score. These findings are relevant for SME policies aimed at facilitating access to credit, reducing the cost of borrowing, and decreasing default, risk management of banks, and the application of theories of financial economics in the context of a financial crisis.
Luypaert, Mathieu; Van Caneghem, Tom (John Wiley & Sons Ltd, 2017)
We examine the joint effect of bidder and target information asymmetry and uncertainty on the payment consideration and subsequent wealth effects in a large sample of acquisitions with both listed and private targets. In line with a risk-sharing argument, we find that acquisitions of targets characterized by higher uncertainty are more likely to be settled with stock. In contrast, higher target information asymmetry increases the likelihood of a cash payment, consistent with bidders strategically exploiting superior information. Acquirers of more opaque targets obtain a larger fraction of total acquisition gains and avoid sharing these gains with target shareholders by offering cash.
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