Research indicates that there is no evidence of a relation between top management relying heavily on budget targets to judge performance and lower-level managers creating more slack in their budgets.

Question

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Research in management accounting suggests that when top management heavily relies on budget targets to evaluate performance, lower-level managers may indeed create more slack in their budgets. This is because lower-level managers, anticipating the pressure to meet these targets, might lower their budgeted revenues or inflate budgeted costs to give themselves a cushion, making it easier to achieve their targets and potentially receive rewards or avoid penalties.

Research Indicates That There Is No Evidence of a Relation