The Impact Of Business Hospitality Manipulation On Corporate Performance

As an indispensable expense in business operations,business hospitality can not only bring direct benefits to enterprises,but also reflect the internal control quality of enterprises to a certain extent.The results of literature research have shown that there is abuse of business hospitality expenses in listed companies in China.Because the business hospitality has a strong "stickiness" feature,and the tax law imposes a certain limit on the business entertainment expenses incurred by the company in the pre-tax deduction.It can be seen that the business entertainment expenses incurred by enterprises affect the performance level of enterprises in many aspects.Different from the perspective of previous studies,this paper uses the business entertainment fee deduction standard stipulated by the tax law as the boundary,and defines the business that is close to the deduction limit to have business entertainment charges,and on this basis,studies the business entertainment based on tax avoidance motives.The impact of fee manipulation on business performance.This is a question worth exploring.This paper firstly reviews the existing research results of neighborhoods such as business entertainment,corporate tax avoidance and corporate performance in the literature review section,and puts forward the research motivation based on the previous research experience.Then in the theoretical part,this paper reviews the principal-agent theory,rent-seeking theory and enterprise tax avoidance theory,which provides theoretical support for the impact of business hospitality manipulation on corporate performance based on tax avoidance motives.The research sample of this paper is the A-share listed company in Shanghai and Shenzhen stock exchanges between 2010 and 2016.Using the combination of theoretical analysis and empirical analysis,this paper studies the impact of business hospitality manipulation based on tax avoidance motives on corporate performance.Considering the particularity of China's market economic system,there are large differences in the enterprises with different property rights.This paper examines the heterogeneity of enterprises with different property rights.At the same time,considering the introduction of the central "eight regulations" policy has a greater impact on the business hospitality of this study,this paper separately tested the heterogeneity of the policy before and after the policy.This paper conducts a sample-by-sample regression analysis before considering the nature of corporate property rights and policies.Finally,the robustness test of the empirical research part of this paper is carried out.The research in this paper finds that: First,the operation of business entertainment expenses based on tax avoidance motives is not conducive to the improvement of corporate performance;Second,compared with non-state-owned enterprises,the operation of state-owned enterprises based on tax avoidance motives is not conducive to the improvement of corporate performance;Third,before the introduction of the “eight regulations” of the central government,the operation of hospitality on the basis of tax avoidance motives after the introduction of this policy is not conducive to the improvement of corporate performance.Based on the above conclusions,this paper attempts to propose corresponding recommendations from both the enterprise and government perspectives:From a business perspective,maintain a moderate level of business hospitality and establish a sound internal governance mechanism;From the perspective of the government,strengthen the tax management of business hospitality,improve the tax awareness of enterprises,increase the penalties for tax violations,and raise the legal awareness of enterprises.