The creation of budgetary slack makes a budgetary goal easier to attain, thus prior studies have presumed that its creation is dysfunctional behavior. In organizational context, where the budgetary control system operates, organizational size and decentralization are considered to be important factors impacting both rigid budgetary control system and budgetary slack. Based upon a structural equation model, research hypotheses were tested using a sample of 150 subordinate managers of publicly owned corporations in Taiwan. This study finds that large size and decentralized firms conceal large amount of budgetary slack, and for managerial sake these firms always adopt rigid budgetary control system. However, the rigid budgetary control cannot significantly reduce the budgetary slack intention. We conclude the paper with comparing the findings of this study with those of prior studies and referring to possible ways to prevent the slack behavior.
