[This paper reports the findings of a field study aimed at providing a better understanding of how and why managers of corporations with multiple divisions set the levels of achievability of annual profit center budget targets. The data, gathered from 54 profit centers in 12 corporations, show that most budget targets are set to be achievable an average of eight or nine years out of ten. This finding contrasts with the prescription made in most management accounting textbooks suggesting that for optimum motivation budget targets should be achievable less than 50 percent of the time. Managers maintain, however, that these highly achievable targets provide considerable challenge, and the high achievability actually provides many advantages, including improved corporate reporting, resource planning, control, and, combined with other control system elements, even motivation.]

Abstract ABSTRACT: This study investigates how differences in corporate-level budgeting systems are related to corporate size, diversity, and degree of decentralization, and how different choices in system design and use are related to organizational performance and manager motivation and attitudes. A model was developed from related findings in research in accounting and organizational behavior, and the expectations in the model were explored with data gathered from 19 firms in the electronics industry. The results generally support the model. They show that budgeting, as part of the corporate control strategy, is related to the corporate context. Larger firms tend to make relatively high use of more formal administrative, as opposed to interpersonal, controls. In all firms, the more formal and elaborate budgeting processes are generally received well by the managers, but in larger firms they appear to be more positively linked with performance.

Peter Brownell, Kenneth A. Merchant, The Budgetary and Performance Influences of Product Standardization and Manufacturing Process Automation, Journal of Accounting Research, Vol. 28, No. 2 (Autumn, 1990), pp. 388-397

Abstract Reviews the book `Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports,' by Howard M. Schilit.

Abstract Reviews the book "Handbook of Management Control Systems," by Ahmed Belkaoui.