Defense Date
2026
Document Type
Dissertation
Degree Name
Doctor of Philosophy
Department
Business
First Advisor
Alisa Brink
Abstract
This study examines whether firms can use their contract authority to reduce budgetary slack in participative budgeting. I argue that a firm operating under a trust contract can credibly threaten to switch to a modified trust contract if realized firm profit falls below an acceptable threshold, incentivizing managers to reduce slack to avoid the less favorable contract. I test this prediction in a laboratory experiment using a 2×2 between-subjects design that also manipulates the presence of a social validation tactic. Results show that the contract-switch threat significantly reduces slack relative to a no-tactic control, while social validation neither produces a comparable effect on its own nor provides incremental benefit when added to the threat. The findings demonstrate that firms' contract authority is itself an effective behavioral lever for curbing budgetary slack.
Rights
© The Author
Is Part Of
VCU University Archives
Is Part Of
VCU Theses and Dissertations
Date of Submission
7-24-2026