| Abstract: | Recent analytical and empirical research in budgeting has focused on conditions under which participation may or may not prove beneficial to the firm. The present study seeks to examine (in a budget setting) the impact on firm returns of managerial participation, private state information, and relative skill. Experimental results indicate a significant improvement in firm and managerial welfare across favorable and unfavorable private state information with budgetary participation. A significant interaction between the type of state information and participation is reported for managers but not firm returns. Finally, relative skill signals are shown to lead to improved managerial performance. |
