Leadership style, information asymmetry and evaluative use of the budget constitute antecedents to budget participation?

Abstract

This study investigates the reasons why superiors encourage the participation of the subordinate in the budget processes of industrial companies headquartered in Brazil, through analysis of the antecedent effects of budget participation: leadership style, asymmetry of information and evaluation use of the budget. Descriptive research was carried out by means of a survey, with the application of a questionnaire in a sample of 106 managers, analysts, budget coordinators or controllers, and quantitative data analysis, with the aid of Modeling Structural Equations. The results revealed that superiors encourage subordinate participation when the superior's leadership style is considered. The reasons why the superiors encourage this participation are related to obtaining private information of knowledge of subordinate managers; and, the definition of objectives and budgetary targets for performance evaluation. Not all the antecedents tested were confirmed in the context of the performance of the companies headquartered in Brazil, which opens the prospect of new studies on the subject. It was concluded that leadership style, evaluative use of the budget and incentive to budget participation constitute antecedent the participation of subordinate managers in the budgetary processes of their organizations. These findings allow us to understand the role of the leader in organizations, the importance of using budget targets to evaluate the performance of subordinates, and encouraging participation as a resource for the qualification of budget processes.

Keywords

• Estilo de liderança
• Assimetria de informação
• Uso avaliativo do orçamento
• Participação orçamentária