Experimental Role Assignment and the Effect of the Perceived Legitimacy of the Superior’s Position on Budgetary Reporting

• In Event: Participative Budgeting

Abstract

There is a growing literature using experimental methods to study questions in participative budgeting settings. We examine how random assignment to experimental roles, a standard experimental practice that does not support the implied assumption in agency models that owners are endowed with the right to any production surplus, changes individuals’ perceptions of the agency setting and their subsequent behavior. We document a significant effect on attitudes about the rights to the production surplus and the level of slack in managers’ reporting when we create a perception of legitimacy in the way roles are assigned. We further document that perceptions and behavior under random role assignment is statistically indistinguishable from a condition in which participants are illegitimately assigned to their roles. Given the importance of experimental studies and agency models in our understanding of participative budgeting, the implications of our results for prior and future research are discussed at length.

Authors

• Jeremy Douthit, University of Arizona

• Michael John Majerczyk, georgia state university