The Effect of Manager's Moral Equity on the Relationship Between Budget Participation and Propensity to Create Slack: A Research Note

This chapter uses agency theory and ethics literature to assess the moderating effect of manager's moral equity on the relation between budget participation and propensity to create slack. Moral equity is the major evaluative criterion for ethical judgment, is based on the overall concept of fairness, justice and right and is often very influential in contemporary moral thought (Robin & Reidenbach (1996) Journal of Business, 5(1) 17–28). The results indicate that a manager's moral equity moderates the effect of budget participation. For managers with high moral equity, the relationship between participation and manager's propensity to create slack is significantly negative while, for managers with low moral equity, the relationship is significantly positive. Further analyses indicate that high budget participation and high moral equity result in less propensity to create slack than high budget participation and low moral equity.