Trade-offs and Transformation: The Dual Impact of Chief Executive Officer Leadership and Advanced Budgeting on Financial vs. Non-Financial Performance under Uncertainty

Abstract

Background: Nowadays, emerging market firms face unpredictable conditions shaped by crises such as COVID-19 and complex regulations. In these circumstances, traditional cost-based accounting is often too rigid to support long-term objectives. Adaptive strategies that integrate leadership, budgeting, and strategic cost accounting are essential for sustained performance.

Objective: This study investigates how perceived environmental uncertainty, strategic cost accounting, and advanced budgeting practices, which are influenced by the leadership traits of chief executive officers, affect firm performance in Thailand.

Methodology: Grounded in Contingency and Upper Echelons Theories, this study adopts a quantitative, cross-sectional survey design. We surveyed 127 Chief Financial Officers (CFOs) drawn from a population of 744 listed firms (2019–2021) using purposive sampling. Primary survey data (n = 127) were combined with secondary archival data from Form 56-1 One Reports to capture financial and non-financial indicators. We estimated relationships using PLS-SEM with bootstrapping to test direct and mediating effects.

Result: The results show that perceived environmental uncertainty significantly increases cost control, budgeting intensity, and leadership centralisation (p < 0.05). These mechanisms enhance financial performance but are weakly or negatively associated with non-financial outcomes such as innovation and stakeholder engagement. CEO characteristics also show a dual pattern, strengthening financial results while reducing non-financial performance when control-oriented styles prevail.

Conclusion: Leadership and advanced accounting practices are essential for financial discipline, but not sufficient on their own. Broader organisational goals, such as stakeholder value and adaptability, require leadership styles and control systems that strike a balance between short-term efficiency and long-term resilience.

Unique Contribution: The study provides evidence from Thailand on how cost strategy, budgeting, and CEO characteristics shape firm performance under uncertainty. It offers leadership-aware, practical guidance for emerging markets facing volatility.

Key Recommendation: Move from rigid budgets to adaptive budgeting with real-time data, feedback loops, and rolling forecasts. Integrate leadership development and participative governance with cost strategies to achieve not only financial stability but also innovation, learning, and stakeholder trust.