Determinants of Moral Judgments Regarding Budgetary Slack: An Experimental Examination of Pay Scheme and Personal Values

39 Pages Posted: 3 Sep 2009

See all articles by Jessen L. Hobson

Jessen L. Hobson

University of Illinois at Urbana-Champaign

Mark J. Mellon

Northern Illinois University - Department of Accountancy

Douglas E. Stevens

Georgia State University - Robinson College of Business

Date Written: September 1, 2009

Abstract

We study moral judgments regarding budgetary slack made by participants at the end of a participative budgeting experiment in which an expectation for a truthful budget was present. We find that participants who set budgets under a slack-inducing pay scheme, and therefore built relatively high levels of budgetary slack, judged significant budgetary slack to be unethical on average whereas participants who set budgets under a truth-inducing pay scheme did not. This suggests that the slack-inducing pay scheme generated a moral frame by setting economic self-interest against common social norms such as honesty or responsibility. We also find that participants who scored high in traditional values and empathy on a pre-experiment personality questionnaire (JPI-R) were more likely to judge significant budgetary slack to be unethical. These results suggest that financial incentives play a role in determining the moral frame of the budgeting setting and that personal values play a role in determining how individuals respond to that moral frame.

Keywords: Budgetary Slack, Moral Reasoning, Moral Judgment, Pay Scheme, Personal Values

JEL Classification: M41, M52, G31, D82

Suggested Citation

Hobson, Jessen L. and Mellon, Mark J. and Stevens, Douglas E., Determinants of Moral Judgments Regarding Budgetary Slack: An Experimental Examination of Pay Scheme and Personal Values (September 1, 2009). Available at SSRN: https://ssrn.com/abstract=1467042 or http://dx.doi.org/10.2139/ssrn.1467042

Jessen L. Hobson

University of Illinois at Urbana-Champaign ( email )

4011 Business Instructional Facility
515 East Gregory Drive
Champaign, IL 61820
United States

Mark J. Mellon

Northern Illinois University - Department of Accountancy ( email )

College of Business
DeKalb, IL 60115
United States

Douglas E. Stevens (Contact Author)

Georgia State University - Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States
404-413-7212 (Phone)
404-413-7203 (Fax)

HOME PAGE: http://robinson.gsu.edu/profile/douglas-e-stevens/

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