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Uncertainty and budgets: an empirical investigation

Uncertainty and budgets: an empirical investigation Purpose – The purpose of the paper is to report the findings of a study of the relation between perceived environmental uncertainty and the abandonment of traditional annual budgets. Design/methodology/approach – The paper is based on the use of data from a survey among the largest Danish companies. The hypothesized relationships are tested by the use of logistic regression. Findings – The results show no sign of a relationship between perceived environmental uncertainty and the abandonment of traditional annual budgets. Instead, the results show a positive relationship between competition in the environment and the adoption of rolling forecasts. Research limitations/implications – Instead of focusing on the budgeting system in isolation, future research should, to a larger extent, focus on management control systems as a package. Practical implications – The results indicate that a competitive environment could be handled by retaining budgets but supplementing them with rolling forecasts. Originality/value – This paper is among the first to investigate the relationship between environmental uncertainty and the abandonment of traditional annual budgets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Baltic Journal of Management Emerald Publishing

Uncertainty and budgets: an empirical investigation

Niels Sandalgaard
Baltic Journal of Management , Volume 7 (4): 19 – Oct 19, 2012
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References (127)

Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1746-5265
DOI
10.1108/17465261211272157
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of the paper is to report the findings of a study of the relation between perceived environmental uncertainty and the abandonment of traditional annual budgets. Design/methodology/approach – The paper is based on the use of data from a survey among the largest Danish companies. The hypothesized relationships are tested by the use of logistic regression. Findings – The results show no sign of a relationship between perceived environmental uncertainty and the abandonment of traditional annual budgets. Instead, the results show a positive relationship between competition in the environment and the adoption of rolling forecasts. Research limitations/implications – Instead of focusing on the budgeting system in isolation, future research should, to a larger extent, focus on management control systems as a package. Practical implications – The results indicate that a competitive environment could be handled by retaining budgets but supplementing them with rolling forecasts. Originality/value – This paper is among the first to investigate the relationship between environmental uncertainty and the abandonment of traditional annual budgets.

Journal

Baltic Journal of Management – Emerald Publishing

Published: Oct 19, 2012

Keywords: Denmark; Large enterprises; Budgetary control; Forecasting; Beyond budgeting; Traditional annual budget; Rolling forecast; Relative performance evaluation; Perceived environmental uncertainty

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