An Exploratory Study of Operational Reasons to Budget

23 Pages Posted: 24 Nov 2009

See all articles by Prabhu Sivabalan

Prabhu Sivabalan

University of Technology Sydney (UTS) - School of Accounting; Financial Research Network (FIRN)

Peter Booth

University of Technology Sydney (UTS) - School of Accounting

Teemu Malmi

Aalto University School of Business

David Andrew Brown

University of Technology Sydney (UTS) - School of Accounting; Financial Research Network (FIRN)

Abstract

Budgets are used widely but criticized, mainly for performance evaluation reasons. We find that organizations regard budgets as more important for planning and control than evaluation, thus proposing a rationale for their continued use irrespective of evaluation-based criticisms. This finding is also important, because most extant budget research focuses on evaluation, suggesting a potential disconnect between budget research and practice. We also find that rolling forecasts are used in tandem with the annual budget in most organizations, and for the same reasons. This was unexpected, as coexistence suggests their adoption for different reasons.

Suggested Citation

Sivabalan, Prabhu and Booth, Peter and Malmi, Teemu and Brown, David Andrew, An Exploratory Study of Operational Reasons to Budget. Accounting & Finance, Vol. 49, No. 4, pp. 849-871, December 2009, Available at SSRN: https://ssrn.com/abstract=1512862 or http://dx.doi.org/10.1111/j.1467-629X.2009.00305.x

Prabhu Sivabalan (Contact Author)

University of Technology Sydney (UTS) - School of Accounting ( email )

P.O. Box 123
Broadway NSW 2007
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Booth

University of Technology Sydney (UTS) - School of Accounting ( email )

P.O. Box 123
Broadway NSW 2007
Australia

Teemu Malmi

Aalto University School of Business ( email )

P.O. Box 21220
Aalto, 00076
Finland
+358 40 5100827 (Phone)

David Andrew Brown

University of Technology Sydney (UTS) - School of Accounting ( email )

P.O. Box 123
Broadway NSW 2007
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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