The Effect of Culture on Budgetary Slack: Evidence from Jordan

Abstract

We investigate the relationship between Hofstede’s cultural values and budgetary slack in Jordanian financial companies listed on Amman Stock Exchange (ASE). The financial sector companies were selected because managers within these companies often have better understanding of accounting practices, including budgeting, than managers in non-financial companies. Data are collected, using a questionnaire, from 54 individuals who occupy a financial manager position or head of department within these companies. Based on the non-parametric one sample t-test, the results show that power distance, uncertainty avoidance, collectivism, femininity and short-term orientation are positively associated with budgetary slack, while restraint is negatively associated with budgetary slack.