This study examines the effects of fairness in budgeting on individual performance in a nonparticipative budgeting setting. An experiment was conducted in which subjects performed a production task and were compensated under a budget‐based incentive contract. Performance was lowest when an unfair budget target was assigned using an unfair budgeting process. When the budget target assigned was fair, the fairness or unfairness of the budgeting process had no effect on performance. When an unfair budget target was determined using a fair budgeting process, mean performance was not significantly different from mean performance of the subjects assigned fair budget targets. Implications of this result in assigning stretch targets are discussed.
Skip Nav Destination
Research Article| January 01 2001
Referent Cognitions and Budgetary Fairness: A Research Note
Online Issn: 1558-8033
Print Issn: 1049-2127
American Accounting Association
Journal of Management Accounting Research (2001) 13 (1): 91–105.
- Views Icon Views
- Share Icon Share
- Search Site
Theresa Libby; Referent Cognitions and Budgetary Fairness: A Research Note. Journal of Management Accounting Research 1 December 2001; 13 (1): 91–105. https://doi.org/10.2308/jmar.2001.13.1.91
Download citation file: