Time is money: The effects of budget funding delay on opportunistic reporting
Yip, Michael A.
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Permalink
https://hdl.handle.net/2142/120375
Description
Title
Time is money: The effects of budget funding delay on opportunistic reporting
Author(s)
Yip, Michael A.
Issue Date
2023-04-18
Director of Research (if dissertation) or Advisor (if thesis)
Williamson, Michael G
Doctoral Committee Chair(s)
Williamson, Michael G
Committee Member(s)
Chen, Clara (Xiaoling)
Hecht, Gary
Goncalo, Jack
Samet, Jordan
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Budget Delay
Abstract
I investigate how delay in the budget review and funding process affects opportunistic reporting using multiple lab experiments. I use an experiment to demonstrate that subordinates report budget information more opportunistically when a supervisor reviews and funds their budget proposal after a delay, consistent with prior research that finds delay increases self-serving behavior. However, I predict and find that delay also amplifies subordinates’ feeling of anticipated dread when the budget approval is required which helps mitigate opportunistic reporting. Moreover, I predict and find the mitigating effect of anticipated dread on opportunistic reporting is stronger for a large relative to small payoff stake with delay, consistent with theory that more consequential outcomes evoke greater anticipated dread. Given the prevalence of delay in budgeting, my results provide new insights on the countervailing effect of anticipated dread on opportunistic budget reporting which can help with the design of management control systems.
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