An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Akhilesh Chandra
The University of Akron

Nirup Menon
University of Texas at Dallas

Barry Mishra
University of California at Riverside

Abstract: This paper examines the adaptive budgetary pattern of five different input factors used for medical and support activities for a set of hospitals. We develop a model that relates the effect of contextual variables on budgetary patterns. Using an econometric time series analysis of budgeted versus actual spending, the paper identifies the budgetary patterns of input factors. The results show a distinct difference in patterns between budgeted and actual spending across input categories. We find that vis-à-vis other production inputs, budgets for IT spending (that have high business uncertainty, environmental instability, innovation index, and short product life cycle), did not correlate significantly with past or budgeted expenses. These results signal a need for formal research for the innovative design of such budgets which require variable fiscal periods, flexible targets, and decentralized decision-making.

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