Budgeting, the individual and the capital market: A case of fiscal stress

Abstract

Budgetary control is a major aspect of management control. It has undergone major shifts of emphasis in both the literature and practice in the later part of the 20th century. A significant influence on the changing practices of this aspect of control has been the growth of and increased influence of the capital market. This paper draws on a detailed field study focusing on the problematic nature of budgetary control in a changing operational environment that acknowledges both the importance, internally, of the organisation members and their contribution to continued growth—and externally the growing influence of shareholders on business operations. The focus of the paper is on the effects of the constant pressure of the share price on the case unit of analysis and how that changed the use of the budgetary control system. This change is illustrated both at a macro level of organisational accountability for predicted results and also as it is driven down the organisation to the level of the individual.

Keywords:

• Capital market
• Budgetary control
• Management control
• Accountability
• Shareholders
• The individual

Acknowledgements

The author would like to thank Brendan McSweeney and two anonymous reviewers for their encouragement and assistance in bringing this paper to publication. Their comments have helped enormously in developing the paper.

Notes

1 In some legal regimes the term ‘members’ refers to shareholders. Here it means the employees, managerial and other.