Contradictory budgeting practice?

Abstract: The purpose of this study is to examine how psychological and economic theory explains the budgetary process and performance by identifying and analyzing the most significant variables of each perspective.The theoretical approach has been to examine two of the most frequently used theories within the area of budgeting, goal-setting theory and agency theory. The study does not find any significant correlation between either goal-setting theory or agency theory with budget performance. Significant correlation is however found between individual variables and budget performance within goal-setting theory.