Determinants of budgetary slack and the moderating role of islamic religiosity in sharia-based public governance: Evidence from Aceh, Indonesia

Type of the article: Research ArticleAbstractBudgetary slack continues to pose governance challenges in public sector budgeting, including in government systems operating under Islamic principles. This study investigates the effects of budget participation, budget emphasis, information asymmetry, and group cohesiveness on budgetary slack and examines the moderating role of Islamic religiosity within a Sharia-based public governance system in Aceh, Indonesia. Survey data were collected from 319 provincial, district, and city government officials directly involved in budget preparation and analyzed using partial least squares structural equation modeling (PLS-SEM). The findings indicate that budget participation (β = 0.187; p = 0.004), budget emphasis (β = 0.235; p < 0.001), information asymmetry (β = 0.249; p < 0.001), and group cohesiveness (β = 0.118; p = 0.049) positively and significantly influence budgetary slack, with the model explaining 54.2% of its variance (R² = 0.542). Islamic religiosity also shows a positive direct effect and significantly strengthens the relationships between budget participation and budgetary slack (β = 0.161; p = 0.003) and between information asymmetry and budgetary slack (β = 0.168; p < 0.001), while it does not moderate the effects of budget emphasis or group cohesiveness. These results suggest that religiosity does not function as a structural safeguard against discretionary budgeting behavior. Instead, agency incentives and information asymmetry remain central in shaping budget outcomes. The findings highlight the importance of reinforcing transparency, accountability frameworks, and internal control systems in Islamic-based municipal and provincial governments to enhance public financial governance.AcknowledgmentThis study was supported by a Doctoral Dissertation Research Grant (Penelitian Disertasi Doktor) for Fiscal Year 2024 from the Indonesian Ministry of Education, Culture, Research, and Technology (Kemendikbudristek), under Contract No. 600/UN11.2.1/PG.01.03/SPK/DRTPM/2024.