Listed firms under fire over reception costs

Famous Weibo commentator Laoxu Shiping said in a posting that China Railway Construction's reception fee may well exceed the given figure.

A netizen with the screen name "Sanshanliushui Woheshan" called for the release of details on how exactly the money was spent. "Who is receiving it? What are they doing for it and how much does it cost?" the netizen asked.

Chinese premier Li Keqiang vowed in March to keep expenditure on government overseas visits, vehicles and receptions from growing during his tenure.

Most government departments have cut their spending in the three areas as part of the frugality campaign that prohibits officials and military officers from engaging in extravagant behavior.

Some people argue that listed firms, especially SOEs, should also comply with the requirements of the campaign as their funds belong to shareholders.

Sun Lijian, a professor with Fudan University, said in a Weibo posting that the exorbitant reception spending may be closely related to more deep-rooted problems.

"(These companies) can obtain more business opportunities by offering receptions and gifts, which may be a root for corruption among the top management and the unfair competition between SOEs and privately owned companies," Sun said.

The high expenses may also be related to low efficiency in the companies' internal governance and a potential problem of tax evasion, according to the professor.

He urged companies to unveil detailed information about reception fees, although corporate law does not make this a requirement at present.