Performance Evaluation and Forecasting Functions and the Perceived Value of the Budget




Budget Functions, Performance Evaluation, Forecasting, Managers' Perceived Value with the Budget


Objective: To investigate the association between performance evaluation and forecasting functions and the value perceived by managers concerning the budget, considering jointly the logics of trade-off and the predominance among the budgetary functions.

 Methodology: A survey was conducted with a sample of 109 medium and large-sized companies that use budgeting. The data were analyzed using Structural Equation Modeling.

 Results: First, the results indicate that the simultaneous use of the budget for performance evaluation and forecasting functions leads to a decrease in the value perceived by managers concerning the budget, signaling the presence of a potential trade-off between these functions. Second, this study also investigated to what extent the predominance of the budget for one of the two functions would mitigate the observed trade-off, but the results were not significant.

 Contributions: This research provides evidence contributing to the discussion of the trade-off between performance evaluation and forecasting functions but does not support that the predominance of one function over the other reduces this tension. This outcome adds to the evidence from previous studies. From a practical standpoint, the study shows that these functions, individually, might encourage managers to recognize the importance of the budget, yet it demonstrates a potential trade-off between these functions, with a higher perceived value associated with the performance evaluation function.


Download data is not yet available.


Arnold, M. C., & Gillenkirch, R. M. (2015). Using Negotiated Budgets for Planning and Performance Evaluation: An Experimental Study. Accounting, Organisations and Society, 43, 1–16.

Arnold, M., & Artz, M. (2019). The use of a single budget or separate budgets for planning and performance evaluation. Accounting, Organizations and Society, 73, 50-67.

Barrett, M. E., & Fraser, L. B. (1977). Conflicting Roles in Budgeting for Operations. Harvard Business Review, July–August: 137–46.

Becker, S. D., Mahlendorf, M. D., Schäffer, U., & Thaten, M. (2016). Budgeting in times of economic crisis. Contemporary Accounting Research, 33(4), 1489-1517.

Bedford, D. S., & Speklé, R. F. (2018). Construct validity in survey-based management accounting and control research. Journal of Management Accounting Research, 30(2), 23-58.

Bourmistrov, A., & Kaarbøe, K. (2013). From comfort to stretch zones: A field study of two multinational companies applying “beyond budgeting” ideas. Management Accounting Research, 24(3), 196-211.

Brüggen, A., Grabner, I., & Sedatole, K. L. (2021). The folly of forecasting: The effects of a disaggregated demand forecasting system on forecast error, forecast positive bias, and inventory levels. The Accounting Review, 96(2), 127-152.

Cassar, G., & Gibson, B. (2008). Budgets, internal reports, and manager forecast accuracy. Contemporary Accounting Research, 25(3), 707-738.

Churchill, N. C. (1984). Budget choice-planning vs control. Harvard Business Review, 62(4), 150.

Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences (2nd edition). Routledge: New York, NY, USA.

Da Luz, I. P., & Lavarda, C. E. F. (2021). Influência do isomorfismo institucional na aceitação do orçamento mediada pelas finalidades de planejamento e diálogo. Revista de Contabilidade e Organizações, 15, e174004-e174004.

Defaveri, I. R., de Santi, D. G., & Toigo, L. A. (2019). Relacionando as características e funções do orçamento com a satisfação orçamentária em empresa de consultoria empresarial. Revista Gestão Organizacional, 12(2).

Faul, F., Erdfelder, E., Lang, A.-G., & Buchner, A. (2007). G*Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior Research Methods, 39, 175-191.

Fisher, J. G., Maines, L. A., Peffer, S. A., & Sprinkle, G. B. (2002). Using budgets for performance evaluation: Effects of resource allocation and horizontal information asymmetry on budget proposals, budget slack, and performance. The Accounting Review, 77(4), 847-865.

Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: algebra and statistics. Journal of Marketing Research, 18(3), 382-388.

Frezatti, F., Mucci, D. M., & Bido, D. D. S. (2022). Structure of planning and control artifacts and their accuracy in Brazilian family businesses. Brazilian Administration Review, 19.

Frezatti, F., Nascimento, A. R. D., Junqueira, E., & Relvas, T. R. S. (2011). Processo orçamentário: uma aplicação da análise substantiva com utilização da grounded theory. Organizações & Sociedade, 18, 445-466.

Frezatti, F., Relvas, T. R. S., Junqueira, E., Nascimento, A. R. D., & Oyadomari, J. C. (2010). Críticas ao orçamento: problemas com o artefato ou a não utilização de uma abordagem abrangente de análise? Advances in Scientific and Applied Accounting, 3(2), 190-216. Recuperado de

Frow, N., Marginson, D., & Ogden, S. (2010). “Continuous” budgeting: Reconciling budget flexibility with budgetary control. Accounting, Organizations and Society, 35(4), 444-461.

Hair, J. F., Jr., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications, Inc: California, pp. 307.

Haka, S., & Krishnan, R. (2005). Budget type and performance—the moderating effect of uncertainty. Australian Accounting Review, 15(35), 3-13.

Hansen, S. C. (2011). A theoretical analysis of the impact of adopting rolling budgets, activity-based budgeting and beyond budgeting. European Accounting Review, 20(2), 289-319.

Hansen, S. C., & Van der Stede, W. A. (2004). Multiple facets of budgeting: an exploratory analysis. Management Accounting Research, 15(4), 415-439.

Hansen, S. C., Otley, D. T., & Van der Stede, W. A. (2003). Practice developments in budgeting: an overview and research perspective. Journal of Management Accounting Research, 15, 95–116.

Harman, H. H. (1976). Modern factor analysis. University of Chicago Press.

Hartmann, F. G. (2000). The appropriateness of RAPM: toward the further development of theory. Accounting, Organizations and Society, 25(4-5), 451-482.

Henri, J. F., Massicotte, S., & Arbour, D. (2020). Exploring the consequences of competing uses of budgets. Australian Accounting Review, 30(4), 257-268.

Henttu-Aho, T. (2018). The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning. Journal of Management Control, 29(3), 327-360.

Hope, J., & Fraser, R. (2003). Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Harvard Business School Press, Boston.

Jensen, M. C. (2001). Corporate budgeting is broken—let’s fix it. In: Harvard Business Review, 79(10), 94–101.

Jordan, S., & Messner, M. (2020). The use of forecast accuracy indicators to improve planning quality: Insights from a case study. European Accounting Review, 29(2), 337-359.

Kruger, S. D., de Togni, L., & Zanin, A. (2022). Usability and functions of the budget in the perception of managers of a company in the metal-mechanical field. Revista Brasileira de Contabilidade e Gestão, 11(21).

Kruis, A. M., Speklé, R. F., & Widener, S. K. (2016). The Levers of Control Framework: An exploratory analysis of balance. Management Accounting Research, 32, 27-44.

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.

Mannes, S., Frare, A. B., & Beuren, I. M. (2021). Efeitos do uso dos orçamentos estático e flexível na inovação de processos e produtos. Revista de Contabilidade e Organizações, 15, e180829-e180829.

Malmi, T., & Brown, D. A. (2008). Management control systems as a package—Opportunities, challenges and research directions. Management Accounting Research, 19(4), 287-300.

Matějka, M., Merchant, K. A., & O'Grady, W. (2021). An empirical investigation of beyond budgeting practices. Journal of Management Accounting Research, 33(2), 167-189.

Marginson, D., & Ogden, S. (2005). Coping with ambiguity through the budget: the positive effects of budgetary targets on managers’ budgeting behaviours. Accounting, Organizations and Society, 30(5), 435-456.

Mucci, D. M., Beck, F., & Frezatti, F. (2021). Configurações do processo orçamentário: análise de empresas que atuam no Brasil. Revista de Educação e Pesquisa em Contabilidade (REPeC), 15(1).

Mucci, D. M., Frezatti, F., & Dieng, M. (2016). As múltiplas funções do orçamento empresarial. Revista de Administração Contemporânea, 20(3), 283-304.

Nitzl, C. (2016). The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development. Journal of Accounting Literature, 37(1), 19-35.

Otti, M., Brouwer, H. (2021). Budgeting Revisited. Strategic Finance. Recuperado de

Sivabalan, P., Booth, P., Malmi, T., & Brown, D. A. (2009). An exploratory study of operational reasons to budget. Accounting & Finance, 49(4), 849-871.

Sponem, S., & Lambert, C. (2016). Exploring differences in budget characteristics, roles and satisfaction: A configurational approach. Management Accounting Research, 30, 47-61.

Van der Stede, W. A., Young, S. M., & Chen, C. X. (2005). Assessing the quality of evidence in empirical management accounting research: The case of survey studies. Accounting, Organizations and Society, 30(7-8), 655-684.

Xu, D., & Meyer, K. E. (2013). Linking theory and context:‘Strategy research in emerging economies’ after Wright et al.(2005). Journal of Management Studies, 50(7), 1322-1346.

Wallander, J. (1999). Budgeting—an unnecessary evil. Scandinavian Journal of Management, 15, 402–421.

Wagner, J., Petera, P., Popesko, B., Novák, P., & Šafr, K. (2021). Usefulness of the budget: the mediating effect of participative budgeting and budget-based evaluation and rewarding. Baltic Journal of Management, 16(4), 602-620.



How to Cite

Mucci, D. M., Beck, F., & Frezatti, F. (2023). Performance Evaluation and Forecasting Functions and the Perceived Value of the Budget. Advances in Scientific and Applied Accounting, 16(3), 009–022/023.