Budget use, task uncertainty, system goal orientation and subunit performance: a test of the 'fit' hypothesis in not-for-profit hospitals

Article Abstract:

Researchers have used contingency theory to demonstrate that organizational performance will be more effective if structures and control systems match organizational contextual variables. The 'fit' hypotheses created to test contingency theory have essentially assumed that a unifying group of organizational objectives exists and that the behavior of individuals can be directed toward the accomplishment of organizational objectives. The 'administratively' rational behavior of individuals and the matching of control strategies to contextual variables depend on whether individuals identify with the organization as a system. The relationships among budget use, task uncertainty, and system goal orientation were investigated by surveying 192 managers of subunits in four Australian not-for-profit hospitals. The results supported the 'fit' hypothesis and indicated that the implementation of control systems requires a recognition that managers may not be systems oriented.

Organizational research

Capital budgeting techniques and firm specific contingencies: a correlational analysis

Article Abstract:

Positive correlations exist between the effectiveness of discounted cash flow techniques (DCFT) and the following factors: (1) predictable environments, (2) the use of long-term reward systems, and (3) degree of capital budgeting process decentralization. A contingent theory for DCFT was constructed by combining analytic developments in financial theory related to capital budgeting with contingency theory. The theory was tested through correlation of a DCFT-effectiveness measure based on sample firms' stock return data with hypothetical contingent variables, and via interviews and questionnaires administered to senior level executives in 35 publicly traded firms. Results suggest that simple adoption of analytical tools is insufficient to promote superior DCFT performance.

Methods, Discounted cash flow, Capital budgets, Financial contingencies

The effects of financial controls on data manipulation and management myopia

Article Abstract:

The existence of management manipulation of short-term performance measures and the encouragement of myopic, short-term management strategies relates positively to the pressure on management to meet financial targets. Management in relatively uncertain environments are more likely to respond to financial pressure by extracting profits from subsequent years and injecting them into current years than management in certain environments.

Managerial accounting