Individual capacity as a moderator of the effects of budget emphasis, organizational commitment, and information asymmetry on budgetary slack

Putu Ika Sawitri; Ni Putu Sri Harta Mimba

doi:10.21744/ijbem.v9n3.2505

Authors

Putu Ika Sawitri
ikasawitri20@gmail.com
Udayana University, Denpasar, Indonesia
Ni Putu Sri Harta Mimba Udayana University, Denpasar, Indonesia

Keywords:

budget emphasis, organizational commitment, information asymmetry, budgetary slack, individual capacity, public university

Abstract

Budgetary slack remains a persistent concern in both private- and public-sector organizations because it may reduce the accuracy of resource allocation and weaken organizational accountability. Budgetary slack occurs when individuals involved in the budgeting process deliberately overestimate expenditures or underestimate revenues to make budget targets easier to achieve. Although such behavior may reduce the risk of failing to meet predetermined targets, it can also lead to inefficient resource allocation and distort performance evaluation. This study examines the effects of budget emphasis, organizational commitment, and information asymmetry on budgetary slack, as well as the moderating role of individual capacity in these relationships. The study was conducted at Udayana University and involved 72 Assistant Faculty Expenditure Treasurers and members of Faculty Planning Teams. Data were collected through a questionnaire survey and analyzed using partial least squares structural equation modeling (PLS-SEM). The results demonstrate that budget emphasis has a positive and significant effect on budgetary slack, indicating that stronger pressure to achieve budget targets increases the tendency to create slack. Organizational commitment has a negative and significant effect on budgetary slack, suggesting that employees with stronger organizational attachment are less likely to engage in opportunistic budgeting behavior.

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