Prague Economic Papers 2023, 32(4):411-445 | DOI: 10.18267/j.pep.838
Corporate Budgeting Practices: Empirical Evidence from the Czech Republic
- a Technical University of Liberec, Faculty of Economics, Department of Finance and Accounting, Liberec, Czech Republic
This paper investigates current budgeting practices of Czech companies. The article aims to provide recent empirical evidence on the impact of business complexity on budgeting in the Czech Republic, with the main focus on modern budgeting methods. Despite the plethora of critical voices against traditional budgeting, budgeting remains an essential part of most companies' corporate governance. The empirical investigation is based on a questionnaire survey and its statistical evaluation using tests of goodness of fit and cluster analysis. Fundamental research questions of the paper include the influence of business complexity on Czech companies' budgeting practices, factors that currently play an essential role and their importance, and the approach of Czech companies to modern budgeting practices. The results indicate that Czech firms use various financial management tools, including budgets. Traditional budgeting methods are still dominant in most companies; empirical data evaluation confirmed mild differences between companies financed by domestic and foreign capital; nevertheless, those distinctions were not confirmed by statistical testing. Essential factors in the budgeting practice of the respondents are the connection of budgets to strategic planning and the possibility of using budgets as a tool for business performance evaluation.
Keywords: budget, budgeting, business company, Czech Republic, domestic capital, foreign capital
JEL classification: G31, G32, G39
Received: August 10, 2022; Revised: April 13, 2023; Accepted: April 17, 2023; Published: August 24, 2023 Show citation
References
- Asogwa, I. E., Etim, O. E. (2017). Traditional Budgeting in Today's Business Environment. Journal of Applied Finance & Banking, 7(3), 111-120.
- Arena, M., Arnaboldi, M. (2013). Risk and Budget in an Uncertain World. International Journal of Business Performance Management, 14, 166-180. https://doi.org/10.1504/ijbpm.2013.052942
Go to original source...
- Ax, C., Greve, J. (2016). Adoption of Management Accounting Innovations: Organisational Culture Compatibility and Perceived Outcomes. Management Accounting Research, 34. https://doi.org/10.1016/j.mar.2016.07.007
Go to original source...
- Batt, C., Rikhardsson, P., Karlsson, T. (2021). Exploring the Impact of Organisational Context on Budgeting. Corporate Ownership and Control, 18(4), 134-151. https://doi.org/10.22495/cocv18i4art10
Go to original source...
- Becker, S. D., Messner, M., Schäffer, U. (2020). The Interplay of Core and Peripheral Actors in the Trajectory of an Accounting Innovation: Insights from beyond Budgeting. Contemporary Accounting Research, 37(4). https://doi.org/10.1111/1911-3846.12593
Go to original source...
- Bergmann, M., Brück, C., Knauer, T., Schwering A. (2020). Digitisation of the Budgeting Process: Determinants of the Use of Business Analytics and its Effect on Satisfaction with the Budgeting Process. Journal of Management Control, 31(1-2), 25-54. https://doi.org/10.1007/s00187-019-00291-y
Go to original source...
- Bisnode MagnusWeb. (2021). Comprehensive Information about Companies in the Czech Republic and Slovakia (database). https://magnusweb.bisnode.cz/
- Bogsnes, B. (2009). Implementing Beyond Budgeting - Unlocking the Performance Potential. New York: Wiley. ISBN: 978-1-119-15247-7.
- Bunce, P. (2003). Blow the Budget! Manufacturing Engineer, 82(1), 34-37.
Go to original source...
- Cardoș, I. R. (2014). New Trends in Budgeting - A Literature Review. SEA - Practical Application of Science, 2(4), 483-490.
- Covaleski, M. A., et al. (2003). Budgeting Research: Three Theoretical Perspectives and Criteria for Selective Integration. Journal of Management Accounting Research, 15, 3-49.
Go to original source...
- Dokulil, J., Zlámalová, J., Popesko, B. (2017). The Perception of Budgeting in Czech Firms - Results of a Survey. Oeconomia Copernicana, 8(2), 273-285. https://doi.org/10.24136/oc.v8i2.17
Go to original source...
- Dokulil, J., Popesko, B., Dvorský, J. (2020). The Budgeting Processes of Czech Companies: the Role of the Ownership Structure and Foreign Capital. Oeconomia Copernicana, 11(4), 779-798. https://doi.org/10.24136/OC.2020.031
Go to original source...
- Dokulil, J., Popesko, B., Kadalová, K. (2022). Factors With a Major Effect on the Budgetary Control Process - An Empirical Study from the Czech Republic. Amfiteatru Economic, 24(59), 236-250. https://doi.org/10.24818/EA/2022/59/236
Go to original source...
- Eckholm, B. G., Wallin, J. (2000). Is the Annual Budget Really Dead? The European Accounting Review, 9(4), 519-539.
Go to original source...
- Fibírová, J., Šoljaková, L. (2009). Role of Budgeting in Modern Corporate Governance (Empirical Study in the Czech Republic). European Financial and Accounting Journal, 4(1), 25-36. https://doi.org/10.18267/j.efaj.61
Go to original source...
- Grover, V., Chiang, R. H., Liang, T. P., Zhang, D. (2018). Creating Strategic Business Value from Big Data Analytics: A Research Framework. Journal of Management Information Systems, 35(2), 388-423. https://doi.org/10.1080/07421222.2018.1451951
Go to original source...
- Hansen, S., Otley, D., Van der Stede, W. (2003). Practice Developments in Budgeting: An Overview and Research Perspective. Journal of Management Accounting Research, 15, 49-70.
Go to original source...
- Hartmann, F. (2000). The Appropriateness of RAPM: Toward the Further Development of Theory. Accounting, Organisations and Society, 25(4-5), 451-482.
Go to original source...
- Hindls, R. et al. (2007). Statistika pro Ekonomy. Praha: Professional Publishing. ISBN: 978-80-86946-43-6.
- Hofer, P., Eisl, C., Mayr, A. (2015). Forecasting in Austrian Companies: Do Small and Large Austrian Companies Differ in their Forecasting Processes? Journal of Applied Accounting Research, 16(3), 359-382.
Go to original source...
- Ionescu, A. (2014). The Role of the Budgetary System in Achieving Enterprise Performance. Manager Journal, 19, 98-108.
- Kenno, S. A., Lau, M. C., Sainty, B. J. (2018). In Search of a Theory of Budgeting: A Literature Review. Accounting Perspectives, 17(4), 507-553. https://doi.org/10.1111/1911-3838.12186
Go to original source...
- Klimaitienė, R., Ramanauskaitė, J. (2019). Insight into Budgeting Practices: Empirical Study of the Largest Manufacturing Companies in Lithuania. Science and Studies of Accounting and Finance: Problems and Perspectives, 13(1), 19-27. https://doi.org/10.15544/ssaf.2019.03
Go to original source...
- Lambert, R. (2001). Contracting Theory and Accounting. Journal of Accounting and Economics, 32(1-3), 3-87.
Go to original source...
- Libby, T., Lindsay, R. M. (2010). Beyond Budgeting or Budgeting Reconsidered? A Survey of North American Budgeting Practice. Management Accounting Research, 21(1), 56-75. https://doi.org/10.1016/j.mar.2009.10.003
Go to original source...
- Liyanage, T., Gooneratne, T. (2021). From 'Traditional' Budgeting to 'Better' Budgeting: Navigating through 'Stability' and 'Change'. Management Accounting Frontiers, 4, 27-50. https://doi.org/10.52153/prj0725005
Go to original source...
- Luft, J., Shields, M.D. (2003). Mapping Management Accounting: Graphics and Guidelines for Theory-consistent Empirical Research. Accounting, Organisations and Society, 28(2-3), 169-249.
Go to original source...
- Matějka, M., Merchant, K. A., O'Grady, W. (2021). An Empirical Investigation of beyond Budgeting Practices. Journal of Management Accounting Research, 33(2), 167. https://doi.org/10.2308/JMAR-19-010
Go to original source...
- Neely, A., Bourne, M., Adams, C. (2003). Better Budgeting or beyond Budgeting? Measuring Business Excellence, 7(3), 22-28.
Go to original source...
- Nguyen, D., Weigel, C., Hiebl, M. (2018). Beyond Budgeting: Review and Research Agenda. Journal of Accounting & Organizational Change, 14, 314-337. https://doi.org/10.1108/jaoc-03-2017-0028
Go to original source...
- Nikodijević, M., Novicevic, B., Rogan, M. (2021). Empirical Study of the Implementation of Certain Budgeting Concepts in Manufacturing Companies in Serbia. Economic Themes, 59(1), 61-76. https://doi.org/10.2478/ethemes-2021-0004
Go to original source...
- O'Grady, W., Akroyd, C., Scott, I. (2017). Beyond Budgeting: Distinguishing Modes of Adaptive Performance Management. Advances in Management Accounting, 29, 33-53. https://doi.org/10.1108/S1474-787120170000029003
Go to original source...
- Petera, P., Šoljaková, L. (2020). Use of Strategic Management Accounting Techniques by Companies in the Czech Republic. Economic Research-Ekonomska Istraživanja, 33(1), 46-67. https://doi.org/10.1080/1331677X.2019.1697719
Go to original source...
- Player, S. (2003). Why Some Organisations Go 'Beyond Budgeting. The Journal of Corporate Accounting and Finance, 14(3), 3-9.
Go to original source...
- Popesko, B., Novák, P., Papadaki, Š., Hrabec, D. (2015). Are the Traditional Budgets still Prevalent: The Survey of the Czech Firms Budgeting Practices. Transformations in Business & Economics, 14(3C), 42-57.
- Popesko, B., Šocová, V. (2016). Current Trends in Budgeting and Planning: Czech Survey Initial Results. International Advances in Economic Research, 22(1), 99-100. http://dx.doi.org/10.1007/s11294-015-9551-y
Go to original source...
- Popesko, B., Ključnikov, A., Hrabec, D. Dokulil, J. (2016). Predictability of Business Environment within Budgeting Process - Is it Connected with Fluctuations of Economy? Economics & Sociology, 9(2), 90-100. https://doi.org/10.14254/2071-789X.2016/9-2/6
Go to original source...
- Popesko, B., Novák, P., Dvorský, J., Papadaki, Š. (2017). The Maturity of a Budgeting System and its Influence on Corporate Performance. Acta Polytechnica Hungarica, 14(7), 91-104. https://doi.org/10.12700/APH.14.7.2017.7.6
Go to original source...
- Rickards, R. (2008). An Endless Debate: The Sense and Nonsense of Budgeting. International Journal of Productivity and Performance Management, 57, 569-592. https://doi.org/10.1108/17410400810904038
Go to original source...
- Samudrage, D., Beddage, H. (2018). Status and Challenges in Implementing Beyond Budgeting: Evidence from Sri Lanka. International Business Research, 11(12). https://doi.org/10.5539/ibr.v11n12p113
Go to original source...
- Warren, J. D., Jr., Moffitt, K. C., Byrnes, P. (2015). How Big Data Will Change Accounting. Accounting Horizons, 29(2), 397-407.
Go to original source...
- Zeller, T., Metzger, L. (2013). Good Bye Traditional Budgeting, Hello Rolling Forecast: Has The Time Come? American Journal of Business Education (AJBE), 6(3), 299. https://doi.org/10.19030/ajbe.v6i3.7810Appendix: Questionnaire
Go to original source...
This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.