Abstract:
Though participation in budgeting has been the most widely studied issue in
management accounting research in the world, it seems that none of the research in Sri
Lanka has attempted to look into this issue. Several studies have investigated the
relationship between budgetary participation and managerial performance (Brownell &
McInnes 1986, Brownell 1981, Milani 1975, Kenis 1979); however, the exact nature of
the relationship remains unclear, as the results reported by previous studies have been
inclusive and contradictory.
Therefore, this study is an attempt to concentrate on behavioural aspects of budget
setting in Sri Lanka. The study examines the functional manager’s participation in budget
setting and its effect on their motivation and job relevant information, especially on their
managerial performance.
Conceptual framework and research hypotheses are developed from related findings in
research in accounting and organizational behaviour. Expectations in the conceptual
framework are explored and hypotheses are tested with data gathered from 43
managers in manufacturing firms. Structured questionnaire was the basic method of
data collection supported by the follow up interviews with selected number of
respondents.
Data is analyzed by using univariate analysis, correlation analysis, regression analysis,
and path analysis. The empirical results prove some research hypotheses and do not
accept the conceptual framework. The study reveals that there is no direct or indirect
effect of budgetary participation on managerial performance. That shows inefficiency of
budgetary participation of the functional managers in manufacturing companies in Sri
Lanka. However, the study concludes that the budgetary participation directly related
with participant’s motivation and with their job relevant information.
