External Supervision And Expense Classification Shifting

On December 4,2012,the Central Political Bureau of China reviewed and approved the “eight regulations”,and the government launched the most stringent anti-corruption action in history.The Central Inspection Team strictly supervised the various expenses of state-owned enterprises,especially sensitive expenses such as corporate hospitality and travel expenses.This article will use the exogenous shock event of the anti-corruption struggle in the central government in 2012 as the case study background,and through case analysis to confirm whether the company will face the problem of cost classification and manipulation when it faces strict external supervision.This case will compare the local state-owned enterprises and large-scale central enterprises with different scales to further study whether there are differences in motivation,timing,means and effects of corporate cost classification manipulation.Finally,the Central Inspection Team was selected to review the data of the same industry as a “ruler” to measure the cost manipulation effect of the enterprise.Based on the above research ideas,this case study shows that some state-owned enterprises have incentives to conduct cost classification manipulation,and hope to effectively avoid external supervision while maintaining a certain level of consumption.Further research has found that there are indeed differences in the motives,timing,means,and manipulation effects of state-owned enterprises of different scales when performing cost classification manipulation.The research found that the reasons for the differences include tax policy changes,tax incentives,and negative news.In addition,compared with small local state-owned enterprises,large-scale central enterprises have higher political sensitivity and cost manipulation,so there is more room for choice of motivation and timing.Finally,by measuring the "ruler data" to measure the cost control effect of the enterprise,the study found that small and medium-sized local state-owned enterprises and large state-owned enterprises have achieved a downward effect through cost classification and manipulation.From the point of view of manipulation,the means adopted by small and medium-sized local state-owned enterprises are moderated,while large state-owned enterprises are radical and effective in a short period of time.In terms of maneuvering effects,the effect of small and medium-sized enterprise cost classification manipulation is not as obvious as that of large state-owned enterprises.