Effect of Budget Emphasis and Motivation on the Relationship between Participative Budgeting and Budgetary Slack and the Impact on the Managerial Performance (A Study on Yayasan Pendidikan Dan Koperasi in the Banten Province)

Abstract

There is a budgetary slack the in budget preparation of Yayasan Pendidikan dan Koperasi in the Province of Banten. The slack was allegedly due to the managerial performance appraisal standards by achieving budget targets, where the owner (employer) applying a standard budget by budget emphasis, and the presence of adverse selection, that is the manager and other insiders know more about the state and prospects of the institution, and also because of the moral hazard, where that manager acts without the knowledge of the shareholders or owners of the company. Path analysis was used with partial least square (PLS) on the answer from 93 people who are members of budget drafting team in each organization as respondents through questionnaires. Results of data analysis showed that the level of budget emphasies on the relationship between participative budgeting and budgetary slack is 30,1%, the remaining 69,9% are other variables that are not described in this study.To improve the effectiveness of the budget, the management should devolve authority, evaluate and ensure that the budget drafting team has considered the overall budget emphasis, as well as measuring managerial performance in determining the planning and budgeting.

Keywords: Participative budgeting, Budget Emphasies,Motivation. Managerial Performance