The Effects of Environmental Uncertainty and Budgetary Control Effectiveness on Propensity to Create Budgetary Slack in Public Sector

Abstract

This study examines the relationship among environmental uncertainty, effectiveness of budgetary control and propensity to create budgetary slack in public organizations. For this purpose, the data collected from 460 public organizations’ managers via questionnaire. Results of analyses show that negative and statistically significant relationship is found between environmental uncertainty and effectiveness of budgetary control and between effectiveness of budgetary control and propensity to create budgetary slack. However, environmental uncertainty has statistically significant and positive impact on propensity to create budgetary slack. It is also found that budgetary control has partial mediation effect on the relationship between environmental uncertainty and propensity to create budgetary slack.