Research Article
Mitigating Budgetary Slack in Local Governments: An Emerging Country Case
@INPROCEEDINGS{10.4108/eai.4-9-2024.2353786, author={Delli Maria and Rindu Rika Gamayuni and Fajar Gustiawaty Dewi and Dian Mustika}, title={Mitigating Budgetary Slack in Local Governments: An Emerging Country Case}, proceedings={Proceedings of the 7th International Conference of Economics, Business, and Entrepreneurship, ICEBE 2024, 4-5 September 2024, Shah Alam, Selangor, Malaysia}, publisher={EAI}, proceedings_a={ICEBE}, year={2024}, month={12}, keywords={budgetary slack control system compensation culture local governments emerging country}, doi={10.4108/eai.4-9-2024.2353786} }- Delli Maria
Rindu Rika Gamayuni
Fajar Gustiawaty Dewi
Dian Mustika
Year: 2024
Mitigating Budgetary Slack in Local Governments: An Emerging Country Case
ICEBE
EAI
DOI: 10.4108/eai.4-9-2024.2353786
Abstract
This study aims to examine the role of the control system, compensation, and organizational culture in mitigating the propensity to create budgetary slack in local governments moderated by moral reasoning. This study used a survey method, with a sample of 212 respondents who were directly involved in the budget preparation process, from 48 regional work units of Lampung Province, Indonesia. Data were analyzed using Wrap-PLS 7.0. The results showed that the control system, and organizational culture moderated by moral reasoning were able to mitigate the tendency to create budgetary slack in regional work units in Lampung province. The control system is too strict and has rigid procedures, causing a positive relationship between the control system and budgetary slack. However, this relationship can be weakened by the presence of moral reasoning. While compensation can trigger budgetary slack, if compensation is used as the basis for short-term performance appraisal. So an alternative compensation system is needed, for example a compensation system that contains punishment, and clawback provisions.
