How Do Managers React to What Happens to Peers? The Influence of Workforce Change Announcements on Budgetary Reporting

37 Pages Posted: 20 Aug 2012

See all articles by James N. Cannon

James N. Cannon

Utah State University, School of Accountancy; Iowa State University

Todd A. Thornock

University of Nebraska at Lincoln - School of Accountancy

Date Written: August 20, 2012

Abstract

In this paper, we investigate the impact of workforce change announcements affecting their own department and the department of a peer manager on managers’ budgetary reporting choices. We apply reciprocity theory to explain managers’ budgetary reporting response to announcements about his/her own department. Managers report larger budgets when they receive a workforce reduction announcement than when they receive an expansion announcement. We apply self-categorization theory to explain how managers’ budgetary reporting choices are also affected by knowledge that a peer manager faces similar or dissimilar changes in workforce. Managers who receive announcements of workforce change similar to the change announced to a peer manager report higher budgets than those who receive announcements of dissimilar workforce change. Lastly, we find that managers’ reciprocation and self-categorization have independent effects on individual decision-making in a budgetary reporting setting. This study contributes to the participative budgeting literature by demonstrating that a peer manager’s situation influences managers’ budgetary reporting. Further, these findings shed light on the impact of owners’ communication of workforce changes on opportunistic budgetary reporting.

Keywords: budgetary reporting, budgetary slack, workforce changes, reciprocity, self-categorization

Suggested Citation

Cannon, James N. and Thornock, Todd A., How Do Managers React to What Happens to Peers? The Influence of Workforce Change Announcements on Budgetary Reporting (August 20, 2012). AAA 2013 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2132999 or http://dx.doi.org/10.2139/ssrn.2132999

James N. Cannon

Utah State University, School of Accountancy ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States
801-927-7718 (Phone)

Iowa State University ( email )

Ames, IA 50011-2063
United States
801-927-7718 (Phone)

Todd A. Thornock (Contact Author)

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
142
Abstract Views
1,630
rank
207,605
PlumX Metrics