Budgeting in Times of Economic Crisis

36 Pages Posted: 12 May 2015 Last revised: 8 Dec 2015

See all articles by Sebastian D. Becker

Sebastian D. Becker

HEC Paris - Accounting and Management Control Department

Matthias D. Mahlendorf

Frankfurt School of Finance & Management

Utz Schäffer

WHU Otto Beisheim School of Management

Mario Thaten

WHU - Otto Beisheim School of Management - Institute of Management Accounting and Control

Date Written: May 12, 2015

Abstract

This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises.

Keywords: Budgeting, budgeting functions, economic crisis, crisis management

JEL Classification: M4, M40, M41

Suggested Citation

Becker, Sebastian D. and Mahlendorf, Matthias D. and Schäffer, Utz and Thaten, Mario, Budgeting in Times of Economic Crisis (May 12, 2015). Contemporary Accounting Research, Forthcoming; HEC Paris Research Paper No. ACC-2015-1122. Available at SSRN: https://ssrn.com/abstract=2605359

Sebastian D. Becker (Contact Author)

HEC Paris - Accounting and Management Control Department ( email )

Jouy-en-Josas
France

Matthias D. Mahlendorf

Frankfurt School of Finance & Management ( email )

Adickesallee 34
Frankfurt, DE RLP 60322
Germany

Utz Schäffer

WHU Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, D-56179
Germany

HOME PAGE: http://www.whu.edu/controlling

Mario Thaten

WHU - Otto Beisheim School of Management - Institute of Management Accounting and Control ( email )

Burgplatz 2
Vallendar, 56179
Germany

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