Abstract—The study focused on budgetary participation in manufacturing companies in Banten Province, Indonesia. The purpose of the study is to find empirical evidence on the cognitive effects of information acquired by local managers related to budgetary participation and job performance. The method of the study is survey method. The sample of the study consisted of 178 middle-level managers of large-scale manufacturing in Banten. The result of the study showed that asymmetry information affects budgetary participation and budgetary participation influence on performance through job relevant information. These findings give some inputs to the company's management when the local information from subordinate is more complete than the superior information. Therefore, the company should open enough space to involve subordinates in the budgeting process. By providing the opportunity to participate in the preparation of the budget, local information obtained will be taken into consideration in deciding the budget. Index Terms—Asymmetry information, budgetary participation, job relevant information, job performance. I. INTRODUCTION The relationship between budgetary participation and job performance has been widely studied by researchers in management accounting literature. The positive correlation between budgetary participation and job performance has been supported by both experimental and survey research [1]. Previous study notes that if the reason for the organization to give space for the participation of the budget is to share information between superiors and subordinates, the asymmetry information is estimated to superiors and subordinates as antecedents of budgetary participation. Asymmetry information can be used as an antecedent of budgetary participation in empirical research [2]. The agency theory found that budgetary participation arise because various parties involved in the budgeting process have different information about uncertainty (e.g. branch and central management) [3], [4]. Asymmetry information arises when subordinates have relevant information toward the decision making process of budgeting while the superior does not have enough relevant information [5]. Asymmetry information occurs when one party has an adequate knowledge of the information about the company, while others are not. Manuscript received April 10, 2013; revised June 04, 2013. This work was supported in part by Department of Accounting, Sultan Ageng Tirtayasa University (UNTIRTA), and Banten Jaya University (UNBAJA), Serang, Indonesia. Imam Abu Hanifah is with Accounting Department at Sultan Ageng Tirtayasa University, Indonesia (e-mail: imamabuhanifah@gmail.com). Shields & Young [4] have proven that there is a positive relationship between asymmetry information and budgetary participation. Asymmetry information will commonly be going on in a very large company with diverse products and technologies. In such companies, the center management did not know about local conditions experienced by lower-level managers. Central management can use budgetary participation to learn about of the local environment and also provide a good motivation for the underlying managers. Thus, the information held lower-level managers (private information) is the antecedent variable that determines the use of budgetary participation. Shields & Young [4] proposed a path analysis model to explain the relationship of participation and performance, and argued that asymmetry information will lead to demand budgetary participation and in turn, budgetary participation related to the company performance. Cognitive mechanism is considered in this budgetary participation research based on the psychological aspect. [6]. Cognitive aspects in budgetary participation provide subordinates the opportunity to share their local and specialized knowledge with their peers and superiors to enhance their job performance [7]. Cognitive aspect used in this study is Job relevant information. The act of participation provides an opportunity for subordinates to gather, exchange and disseminate job-relevant information (JRI) to enhance their decision making process [6]. Job relevant information aims to facilitate decision-making related to the task. Job relevant information also gave a more accurate prediction of environmental conditions, and can improve performance because it would be more effective in selecting appropriate actions. Champbell and Gingrich provided some evidences that can support positive performance effects of job relevant information and concluded that participation in goal setting was needed more for a complex work than for simpler projects which do not give significant effect on the job performance [8]. The impact of budgetary participation on variety of variables may give different results for developing countries. Some government agencies in Indonesia have conducted the study and concluded that the top management in developing countries is often reluctant to share information with subordinates due to fear of manipulation and misinterpretation of information by their subordinates [9]. This is because many senior managers are politicians and they like to maintain power distance with their subordinates [10]. In other words, other researchers stated that managers in developing countries can participate in the budgeting process Imam Abu Hanifah Cognitive Effects in the Relationship between Budgetary Participation and Job Performance: A Case Study of Manufacturing Industry in Banten, Indonesia International Journal of Social Science and Humanity, Vol. 3, No. 4, July 2013 396 DOI: 10.7763/IJSSH.2013.V3.269