The Effect of Information Asymmetry and Organizational Commitment on the Relationship Between Budget Participation and Budget Gaps

Oct 13, 2025 by magicalceylontours.com 101 views

The Effect of Information Asymmetry and Organizational Commitment on the Relationship Between Budget Participation and Budget Gaps

Introduction

In the world of accounting, the relationship between budget participation and budget gaps has become an interesting topic to be examined. Various previous studies show conflicting results, which may be caused by the influence of moderation variables. This study uses a contingency approach to explore the effect of information asymmetry and organizational commitment as a moderation variable in the relationship between budget participation and budget gaps.

The Importance of Budget Participation and Budget Gaps

Budget participation is a crucial aspect of financial management, as it allows managers to have a say in the budgeting process and make informed decisions about resource allocation. However, budget gaps can occur when there is a mismatch between budgeted and actual expenses, leading to financial difficulties for the organization. Understanding the relationship between budget participation and budget gaps is essential for effective financial management.

Research Methodology

The research subject consists of the accountability central manager of the company listed on the Stock Exchange, especially those located in North Sumatra. Data collection was carried out through a questionnaire distributed by the purposive sampling method. Of the total 114 questionnaires sent, 61 questionnaires returned with a return rate of 53.5%. Data analysis was carried out using a moderate regression analysis method (MRA) which aims to determine the effect of moderation in the research model.

Findings and Analysis

The results of the analysis showed an interaction between information asymmetry, organizational commitment, and budget participation, but no significant interactive effect was found on the budget gap. The first finding states that information asymmetry does not significantly affect the budget gap, although it is expected that this variable can affect how managers perceive their budget participation. This finding reflects that despite the uncertainty of information in the organization, it is not enough to create a significant budget gap.

The second finding shows that organizational commitment also does not have a significant impact on the budget gap when interacting with budget participation. This can show that individual commitment to the organization is not directly proportional to the management of the budget. Managers may still be able to manage budget efficiently without the positive effect of their commitment level on the organization.

Relevance of Findings

From the analysis conducted, there are some important implications for financial management practices. First, the organization needs to realize that increasing organizational commitment and reducing information asymmetry will not automatically reduce the budget gap. This indicates the need for a more holistic approach in budget management, which considers other factors that may be more relevant, such as organizational culture and internal communication processes.

Furthermore, the results of this study confirm the importance of understanding the context and specific conditions of the organization in evaluating budget policies and practices. The implementation of strategies that are too focused on increasing budget participation or improving information communication may not be enough to minimize budget gaps without considering broader dynamics in the organization.

Conclusion

This study contributes to the existing literature on budget participation and budget gaps by exploring the effect of information asymmetry and organizational commitment as moderation variables. The findings suggest that while information asymmetry and organizational commitment may have an impact on budget participation, they do not have a significant effect on the budget gap. This study opens space for further research to explore other variables that might affect the relationship between budget participation and budget gaps.

Recommendations for Future Research

Researchers in the future are expected to consider other factors such as leadership, the influence of organizational culture, or even the impact of information technology in creating more effective budget management. Additionally, further research can be conducted to explore the relationship between budget participation and budget gaps in different organizational contexts, such as non-profit organizations or government agencies.

Limitations of the Study

This study has some limitations that should be acknowledged. First, the sample size is relatively small, which may limit the generalizability of the findings. Second, the study only focuses on the accountability central manager of the company listed on the Stock Exchange, which may not be representative of other types of organizations. Future research can be conducted to address these limitations and provide a more comprehensive understanding of the relationship between budget participation and budget gaps.

Implications for Practice

The findings of this study have implications for financial management practices. First, organizations should not rely solely on increasing budget participation or improving information communication to minimize budget gaps. Instead, a more holistic approach should be taken, considering other factors that may be more relevant, such as organizational culture and internal communication processes. Second, organizations should recognize the importance of understanding the context and specific conditions of the organization in evaluating budget policies and practices.

Conclusion

In conclusion, this study contributes to the existing literature on budget participation and budget gaps by exploring the effect of information asymmetry and organizational commitment as moderation variables. The findings suggest that while information asymmetry and organizational commitment may have an impact on budget participation, they do not have a significant effect on the budget gap. This study opens space for further research to explore other variables that might affect the relationship between budget participation and budget gaps.
Frequently Asked Questions (FAQs) About the Effect of Information Asymmetry and Organizational Commitment on the Relationship Between Budget Participation and Budget Gaps

Q: What is the main objective of this study?

A: The main objective of this study is to explore the effect of information asymmetry and organizational commitment as moderation variables in the relationship between budget participation and budget gaps.

Q: What is budget participation, and why is it important?

A: Budget participation refers to the extent to which managers are involved in the budgeting process and have a say in the allocation of resources. It is an important aspect of financial management because it allows managers to make informed decisions about resource allocation and ensures that the budget is aligned with the organization's goals and objectives.

Q: What is information asymmetry, and how does it affect budget participation?

A: Information asymmetry refers to the situation where one party has more information than the other party. In the context of budget participation, information asymmetry can occur when managers have limited access to information about the organization's financial situation, which can affect their ability to make informed decisions about resource allocation.

Q: What is organizational commitment, and how does it affect budget participation?

A: Organizational commitment refers to the extent to which employees are committed to the organization and its goals. It is an important factor in budget participation because it can affect the level of engagement and motivation of employees in the budgeting process.

Q: What are the findings of this study?

A: The findings of this study show that information asymmetry and organizational commitment do not have a significant effect on the budget gap when interacting with budget participation. This suggests that while these factors may have an impact on budget participation, they do not have a direct impact on the budget gap.

Q: What are the implications of this study for financial management practices?

A: The implications of this study for financial management practices are that organizations should not rely solely on increasing budget participation or improving information communication to minimize budget gaps. Instead, a more holistic approach should be taken, considering other factors that may be more relevant, such as organizational culture and internal communication processes.

Q: What are the limitations of this study?

A: The limitations of this study include the relatively small sample size and the focus on the accountability central manager of the company listed on the Stock Exchange. Future research can be conducted to address these limitations and provide a more comprehensive understanding of the relationship between budget participation and budget gaps.

Q: What are the recommendations for future research?

A: The recommendations for future research include exploring other factors that may affect the relationship between budget participation and budget gaps, such as leadership, organizational culture, and information technology. Additionally, further research can be conducted to explore the relationship between budget participation and budget gaps in different organizational contexts.

Q: What are the practical implications of this study for organizations?

A: The practical implications of this study for organizations are that they should recognize the importance of understanding the context and specific conditions of the organization in evaluating budget policies and practices. Additionally, organizations should take a more holistic approach to budget management, considering other factors that may be more relevant, such as organizational culture and internal communication processes.

Q: What are the future directions for research on budget participation and budget gaps?

A: The future directions for research on budget participation and budget gaps include exploring other factors that may affect the relationship between budget participation and budget gaps, such as leadership, organizational culture, and information technology. Additionally, further research can be conducted to explore the relationship between budget participation and budget gaps in different organizational contexts.