JURNAL RISET AKUNTANSI DAN KEUANGAN, 9(3), 2021, 445-458 445 | Jurnal Riset Akuntansi dan Keuangan Vol.9 | No.3 | 2021 LEADER’S REPUTATION AND BUDGETARY SLACK: THE ROLE OF TRUTHFULNESS OF SUBORDINATE Febriati 1 , Dhea R Yunita 2 Akuntansi, Fakultas Ekonomi, Universitas Panca Bhakti, Pontianak, Indonesia 1 Magister Akuntansi, Pascasarjana, STIE YKPN, Yogyakarta, Indonesia 2 Abstract. Prior research focusing on informal budget control systems is still limited, so this research is important to be conducted by researchers. In addition, there was a deficit problem that occurred in the West Bandung Regency government budget in 2019 showing an inaccurate budget estimate, so it was issued to discuss the budgetary slack. This study aims the effect of subordinates' truthfulness of the relationship between leader’s reputation and budgetary slack. This study uses a laboratory experiment method with participants being Accounting Students at Panca Bhakti University. A data analysis technique used two-way ANOVA with 2x2 factorial experimental design. The results showed that (1) the influence of leader’s reputation affected on the budgetary slack, (2) subordinates’ truthfulness affected on the budgetary slack, (3) subordinates’ truthfulness affected on the relationship between leader’s reputation and budgetary slack, (4) in favourable leader’s reputation condition, high subordinates’ truthfulness would reduce budgetary slack compare to low subordinates’ truthfulness, and (5) in conditions of high subordinates’ truthfulness, the favourable leader’s reputation would reduce budgetary slack compared to the unfavourable leader’s reputation. Keywords. Budgetary Slack; Leader’s Reputation; Truthfulness of Subordinate. Abstrak. Masih terbatasnya litaratur akuntansi yang berfokus terhadap sistem pengendalian anggaran yang bersifat informal memungkinkan penelitian ini penting untuk dilakukan oleh peneliti. Selain itu, adanya kasus defisit yang terjadi pada APBD pemerintah Kabupaten Bandung Barat Tahun 2019 menunjukkan estimasi anggaran tidak akurat, sehingga mengakibatkan terjadinya kesenjangan anggaran. Penelitian ini bertujuan untuk menguji pengaruh kejujuran bawahan terhadap hubungan antara reputasi atasan dan kesenjangan anggaran. Penelitian ini menggunakan metode eskperimen laboratorium dengan partisipan adalah Mahasiswa Akuntansi Universitas Panca Bhakti. Teknik analisis data menggunakan Two-Way ANOVA dengan desain eksperimen 2x2 faktorial. Hasil penelitian menunjukkan bahwa (1) reputasi atasan memengaruhi kesenjangan anggaran, (2) kejujuran bawahan memengaruhi kesenjangan anggaran, (3) kejujuran bawahan memengaruhi hubungan antara reputasi atasan dan kesenjangan anggaran, (4) dalam kondisi reputasi atasan yang favourable, kejujuran bawahan yang tinggi akan mengurangi terjadinya kesenjangan anggaran dibandingkan kejujuran bawahan yang rendah, dan (5) dalam kondisi kejujuran bawahan tinggi, reputasi atasan yang favourable akan mengurangi terjadinya kesenjangan anggaran dibandingkan reputasi atasan yang unfavourable. Kata Kunci. Kejujuran Bawahan; Kesenjangan Anggaran; Reputasi Atasan. Corresponding author. Email: febriati07@gmail.com 1 , yunita.dhearizki@gmail.com 2 How to cite this article. Febriati & Yunita, D. R. (2021). Leader’s Reputation And Budgetary Slack: The Role Of Truthfulness Of Subordinate. Jurnal Riset Akuntansi dan Keuangan, 9(3), 445-458. History of article. Received: Agustus 2021, Revision: Oktober 2021, Published: Desember 2021 Online ISSN: 2541-061X.Print ISSN: 2338-1507. DOI: 10.17509/jrak.v9i3.32618 Copyright©2019. Published by Jurnal Riset Akuntansi dan Keuangan. Program Studi Akuntansi. FPEB. UPI INTRODUCTION The phenomenon of budgetary slack is one of the most researched topics in management accounting (Onsi, 1973; Merchant, 1985; Young, 1985; Dunk, 1993; Stevens, 2002; Web, 2002; Chong & Ferdiansah, 2011). However, these studies focus on budget control systems to reduce the occurrence of budgetary slack in the context of formal versus informal budget control systems (Chong & Loy, 2015). The formal budget control system is a mechanism that is structurally determined by the organization as part of organizational procedures that aim to prevent and detect the dysfunctional behavior of managers, whereas the informal budget control system is a control mechanism established through the culture and environment of the organization that affects the behavior of organizational members to work in accordance with organizational goals (Chong & Ferdiansah, 2011). Formal budget control systems such as budget control (Kren, 1993), budget variance policies (Web, 2002), and preventive and detection controls (Christ et al., 2008). Kramer (1999) explains that