WHEN TRUST BACKFIRES: THE MEDIATING ROLE OF TRUST ON BUDGETARY SLACK
DOI:
https://doi.org/10.70248/jakpt.v4i1.4616Abstract
The objective of the current study is to investigate the mediating effect of trust on the link between procedural justice and budgetary slack with the moderating variable of control monitoring. This study was conducted on 47 civil officers in the Regional Government of Riau Province that are participating in the budgeting process. Data were obtained by a questionnaire, using a 7-point Likert scale derived from prior investigations. Data analysis was performed with Partial Least Squares-Structural Equation Modelling (PLS-SEM) using WarpPLS 7.0. The outcomes of the research suggest that procedural justice can improve trust while trust can increase financial slack. Moreover, the trust mediation has a considerable positive effect on the relationship between procedural justice and slack in the indirect effect, which is contrary to predictions. However, control monitoring was not a moderator of the effect of procedural fairness on confidence. These results suggest a trust paradox phenomena in the public sector that high trust may actually induce opportunistic behaviour in budgeting. This work contributes to the growth of the literature on behavioural accounting in the public sector, especially in Indonesia, and also has practical implications for the local government budget management.
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