Quotation Grabner, Isabella, Moers, Frank. 2021. Determinants and consequences of budget reallocations. Contemporary Accounting Research - Recherche Comptable Contemporaine. 38 (3), 1782-1808.




We investigate the determinants and consequences of budget reallocations—that is, corrective changes to the budget made during the year. Using proprietary data from a large consumer goods manufacturer, we analyze the extent to which initial budgeting decisions drive reallocations. Examining this relationship is important because initial budget negotiations are often troubled by power struggles and politicking, which may give rise to the need for reallocations. We hypothesize that one important driver of reallocation decisions is the firm's aim to correct systematic deviations from the optimal initial budget that were driven by lobbying during the initial budgeting process. We find evidence that is consistent with this prediction. In a more exploratory analysis, we show that reallocations do not have the desired effects on market performance. In particular, budget cuts are negatively associated with a product's change in market share. More surprisingly, while budget increases do help product lines achieve their sales targets in the last quarter, they do not boost market share. Our results demonstrate that efficient investment planning is essential to achieve an improvement in market performance.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Contemporary Accounting Research - Recherche Comptable Contemporaine
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-A, VW-B, WH-A
Language English
Title Determinants and consequences of budget reallocations
Volume 38
Number 3
Year 2021
Page from 1782
Page to 1808
URL https://onlinelibrary.wiley.com/doi/10.1111/1911-3846.12681
DOI https://doi.org/10.1111/1911-3846.12681
Open Access Y
Open Access Link https://onlinelibrary.wiley.com/doi/10.1111/1911-3846.12681


Grabner, Isabella (Details)
Moers, Frank (Maastricht University, Netherlands)
Institute for Strategy and Managerial Accounting IN (Details)
Institute for Strategy and Managerial Accounting (Grabner) (Details)
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