The Effect of Superiors' Exogenous Constraints on Budget Negotiations

• 成果类型: Article
• 署名作者: Arnold, Markus C.
• 署名单位: University of Bern
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50864
• 发表日期: 2015
• 页码: 31-57
• 关键词: Information asymmetry; PROCEDURAL FAIRNESS; backward induction; real effort; performance; JUSTICE; COMPENSATION; determinants; COMPETITION; allocation

摘要

In a world characterized by increasing pressure from financial and product markets, the question of how exogenous constraints affect internal coordination and control processes has become increasingly important. This experiment investigates how two exogenous constraints that superiors can face in budget negotiation settings, increased opportunity costs and financial pressure to meet unit targets, affect budget negotiations and subordinate effort. The results show that both constraints induce more cooperation, but in different ways. Financial pressure on the superior leads to more cooperative negotiation behavior by superiors and subordinates than increased opportunity costs. Specifically, subordinates do not take advantage of the superior's increased financial pressure to enforce lower budgets. After negotiation, both constraints strongly mitigate the negative effects of superior budget imposition on subordinate effort because exogenous constraints eliminate the effect of procedural fairness considerations on subordinate effort.