The Use of a Single Budget or Separate Budgets for Planning and Performance Evaluation

Markus Christopher Arnold & Martin Artz
Budgeting has different functions in the firm that are not necessarily congruent with each other but conflict. Specifically, in many firms, budgets are simultaneously set and used for both operative planning and performance evaluation. Although prior literature recommends using different budget levels for different purposes to resolve potential conflicts between these functions, empirical evidence indicates that the majority of firms use a single budget level for planning and performance evaluation. To examine the questions of...
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