The Effects of Quasi-taxes and Entertainment Costs on Firm Growth in Korea
The Effects of Quasi-taxes and Entertainment Costs on Firm Growth in Korea
Joosung Jun
Korean Journal of Public Finance , 2014
Abstract
Using externally audited nonfinancial firm data for the period 1985~2007, this paper shows that quasi-tax burden such as entertainment expenses and contributions can increase firm sales growth. This implies that unlike corporate income tax which typically figures in the cost side of firm operation, quasi-taxes need to be evaluated in terms of net-of-benefit costs.
In addition, this paper shows that non-business related transactions in entertainment expenses have positive effects on firm growth. These results are more pronounced in small and medium-sized firms as well as those firms with entertainment costs exceeding deduction limits.
Key Words: corporate taxes, entertainment costs, quasi-taxes, firm growth
The Effects of Quasi-taxes and Entertainment Costs on Firm Growth in Korea
Joosung Jun
Korean Journal of Public Finance , 2014
Abstract
Using externally audited nonfinancial firm data for the period 1985~2007, this paper shows that quasi-tax burden such as entertainment expenses and contributions can increase firm sales growth. This implies that unlike corporate income tax which typically figures in the cost side of firm operation, quasi-taxes need to be evaluated in terms of net-of-benefit costs.
In addition, this paper shows that non-business related transactions in entertainment expenses have positive effects on firm growth. These results are more pronounced in small and medium-sized firms as well as those firms with entertainment costs exceeding deduction limits.
Key Words: corporate taxes, entertainment costs, quasi-taxes, firm growth