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Spillover Effects and Freedom: An Experimental Investigation of the Indirect Effects of Managerial Autonomy and Firms’ Rationale for the Implementation of Internal Controls Across the Organizational Hierarchy

The creation of excessive budgetary slack can be costly, causing organizations to implement internal controls to motivate employees to report more honestly. Internal control research explores many control-related motivations; however, the behavioral effects of autonomy in expanded organizational hierarchies are not well understood in budgeting contexts. This paper examines managerial autonomy and firms’ rationales for the implementation of internal controls in a setting that extends the common participatory dyad utilized in prior literature to an organizational hierarchy that includes owners, mid-level managers, and employees. This setting is explored through the lens of self-determination theory and psychological reactance theory, which offer complementary yet opposite conceptualizations of autonomy. This paper posits that owner restrictions on mid-level manager autonomy can spillover and indirectly influence budgeting decisions. Additionally, the potential for this spillover to influence the relationship between a firm’s rationale for the implementation of internal controls and subsequent budgetary decisions is examined. Findings indicate that the autonomy of mid-level managers has a spillover effect that influences manager’s rejection rates between rounds, but not across rounds and does not interact with a firm’s control implementation rationale.

Identiferoai:union.ndltd.org:vcu.edu/oai:scholarscompass.vcu.edu:etd-6969
Date01 January 2019
CreatorsMasters, Erin M
PublisherVCU Scholars Compass
Source SetsVirginia Commonwealth University
Detected LanguageEnglish
Typetext
Formatapplication/pdf
SourceTheses and Dissertations
Rights© Erin M Masters

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