Empirical Analysis on the Nonlinear Value Relevance of Entertainment Expenses：Focused on Korean Manufacturing Companies

Strategic Resource Utilization for Enhancing Corporate Value: Dynamics of Exploration and Exploitation in Korea

“…In practice, organizations incur expenses to drive business and can be linked to accounting activities to achieve short-term goals. Companies allocate a certain amount of entertainment expenses to facilitate business meetings and negotiations to support efficient business operations [15][16][17]. Since short-term exploitation is often performed under time constraints, companies need to make quick decisions to adapt to rapidly changing market conditions.…”

“…Since short-term exploitation is often performed under time constraints, companies need to make quick decisions to adapt to rapidly changing market conditions. Entertainment expenses support efficient business execution under time constraints [15][16][17]. Short-term exploitation focuses on maximizing short-term profits and achieving business goals and seeks immediate gains.…”

“…Short-term exploitation focuses on maximizing short-term profits and achieving business goals and seeks immediate gains. Entertainment expenses directly contribute to maintaining and improving business relationships, successfully negotiating deals, and realizing immediate business results [15][16][17]. Entertainment expenses play an important role in securing a company's competitiveness and realizing immediate business results by efficiently utilizing resources and supporting quick decision-making [15][16][17].…”

“…Entertainment expenses directly contribute to maintaining and improving business relationships, successfully negotiating deals, and realizing immediate business results [15][16][17]. Entertainment expenses play an important role in securing a company's competitiveness and realizing immediate business results by efficiently utilizing resources and supporting quick decision-making [15][16][17]. Due to the nature of entertainment expenses, they can be linked to the concept of exploitation.…”

“…Entertainment expenses (corporate business promotion expenses) are expected to increase corporate value by contributing to increasing a company's sales by spending it on a specific target for business purposes [15,17]. However, while such entertainment expenses may increase corporate value in certain industries, they may not be related to increasing corporate value in other industries or may result in a decrease in corporate value [16]. Therefore, this study includes it as a key independent variable to verify whether entertainment expenses can contribute to increasing corporate value in companies belonging to the electronics and metal industries.…”