Budgetary Slack

Greetings Sir John, I would like to double confirm my understanding

For budgetary slack, it is disadvantageous to the top management because
A) Bottom managers can easily reach the target, which might be not challenging and demanding, this is as a result of participative budgeting. This will serve as a huge disadvantage for competitive advantage of company.

Budgetary slack always lead to
1) overstate expenses
2) understate revenue

B) For budgetary slack, it is advantageous to the top management because
1) Reduce the dysfunctional consequences of failure, because the bottom managers can have flexibility and autonomy to control the figures (overspend in one area, underspend in another area, encourage creativity)
2) Assist top management to counter future uncertainties, an existence of budgetary slack allow manager to control the figures in the budget (controllability principle), as the bottom managers are more well-averse of the operational of the company (info asymmetry)
3) Budgetary slack upholds participative budgeting, it provides a sense of ownership and commitment to the bottom managers to achieve the target
4) Assist strategic planning of the company (long term/ profit conscious style)

However, budgetary slack could only be accepted in certain acceptable circumstances, such as high uncertainties of the future (long term strategic planning). This is to protect the share price of the company, as not attaining the performance target/ budget may lead to a drop of investor confidence.

I hope you can double confirm my understanding Sir John