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A regulatory focus theory perspective on the determinants of budgetary slack

Roopa Chandrasekhar, University of Nebraska - Lincoln

Abstract

This study draws from the literature in psychology and is the first to use Higgins' (1997, 1998) Regulatory Focus theory to examine the influence of an individual-level variable (Regulatory Focus) and a situational variable (Incentive Frame) on budgetary slack. Higgins' (1997, 1998) regulatory focus theory posits that people have two distinct self-regulatory foci to align their behavior towards their goals - a promotion focus and a prevention focus. Promotion-focused individuals are concerned with advancement, are sensitive to events involving the presence and absence of positive outcomes (i.e., Gain vs. Non-Gain), and prefer an eager approach to pursuing goals. Prevention-focused individuals on the other hand, are concerned with safety, are sensitive to events involving the absence and presence of negative outcomes (Loss vs. Non-Loss), and prefer a vigilant approach to pursuing goals. Promotion and prevention-focused individuals' varying degree of sensitivity to events involving the presence/absence of positive outcomes and the absence/presence of negative outcomes, respectively, influences their behavior. Incentive schemes which emphasize certain desired end states during budget participation may or may not be conducive for promotion and prevention-focused individuals to use their preferred strategy (eagerness vs. vigilance) while determining and attaining their budgets, in turn influencing the level of slack created. While significant effects were found for the Incentive Frame, the effects of Regulatory Focus on budgetary slack were not significant.

Subject Area

Accounting|Behavioral psychology

Recommended Citation

Chandrasekhar, Roopa, "A regulatory focus theory perspective on the determinants of budgetary slack" (2008). ETD collection for University of Nebraska-Lincoln. AAI3331314.
https://digitalcommons.unl.edu/dissertations/AAI3331314

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