An Empirical Study On The Relationship Between G&A And The Company Performance

General and administrative expenses mean the expense used for the operating of a company. General and administrative expenses include many detailed account subjects, such as office expense, professional expense, salary, travel and transportation expense and so on. As in accounting practice, there’s no exactly criterion for clarify, general and administrative often become the channel of fraud. With the reform and opening-up policy, accounting standards are developing a lot, the contents of General and administrative expenses have changed a lot as well.By now, the study about general and administrative expense is mainly focus on the agent cost. A large amount of articles concentrate on the relationship of the agent cost and the performance of companies. The consumption of general and administrative expense represents the management capacity of a company. Though there are many study articles about general and administrative expense, most of them didn’t explore more about the factor that drive the expense. So this paper discussed about the relationship between the company performance and the detailed account subjects that belong with general and administrative expense.This paper take the data of the cultural industry for example, as a new industry, the cultural industry has been encouraged by the government policy. As an industry that emphasize creativeness, the level of general and administrative expense of industry is larger than other industries. This paper collected the data about40companies of cultural industry, that include ROE and EPS, which stand for the performance of the company, and the debt-to-asset ratio, the scale of the asset and board of directors, and the number of independent directors, which stand for the corporate governance capability. Besides, the paper also collected the salary expense, the office expense, the entertainment and communication expense and the professional expense. The regress result of the data illustrated the performance of the company was influenced by the decrease and increase of these expense.According to the result of the empirical analysis, we conclude that the corporate should strengthen the control of the general and administrative expense. Such as constructing the comprehensive budget management system; Strengthening the approval procedure of the general and administrative expense; besides, the company should warn the staff of the importance of less use of general and administrative expense; at the same time, the company can construct evaluation system that connect the performance of the staff or the department with the use of general and administrative expense to encourage the staff use the general and administrative expense reasonably.According to the result of the empirical analysis, we conclude that the corporate should strengthen the control of the general and administrative expense. Such as constructing the comprehensive budget management system; Strengthening the approval procedure of the general and administrative expense; besides, the company should warn the staff of the importance of less use of general and administrative expense; at the same time, the company can construct evaluation system that connect the performance of the staff or the department with the use of general and administrative expense to encourage the staff use the general and administrative expense reasonably.