This study investigates the effect of honesty reminders on budgetary slack. Based on the self-concept maintenance theory of Mazar, Amir, and Ariely (2008), I posit that honesty reminders can reduce budgetary slack by making people more aware of their own standards of honesty and lowering their dishonesty thresholds, resulting in more honest behavior. I find strong evidence that honesty reminders reduce budgetary slack and are marginally more effective than penalties in reducing budgetary slack. Finally, I find that honesty reminders have a stronger effect on slack reduction than penalties when the payoff for slack creation is higher.
participative budgets, honesty reminders, dishonesty thresholds, penalties
PhD in Business (General Management)
Business Administration, Management, and Operations | Finance and Financial Management
LIM, Chee Yeow
Singapore Management University
City or Country
YUEN, Katherine Chi Kwan.
Can honesty reminders reduce budgetary slack?. (2017). 1-69. Dissertations and Theses Collection (SMU Access Only).
Available at: http://ink.library.smu.edu.sg/etd_coll_smu/49
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