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)
Corporate Finance | 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: https://ink.library.smu.edu.sg/etd_coll_smu/49
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