There's also the tax advantage that comes from spending their entire budget. Since corporate taxes, in the U.S. at least, are based on a business' net revenue as opposed to their gross.

The following is based on the assumption that corporate taxes are 30% of a company's net revenue.

Let's say a company has a gross yearly revenue of $1 million.

Their base operating costs were $600 thousand shortly before the end of the fiscal year. Because of smart employees they ended up operating severely underbudget without sacrificing quality and while maintaining the growth the higher ups wanted.

So the company would get taxed based on their $400 thousand in net revenue. That's $120 thousand.

However, the company didn't expect to be taxed on nearly half of their gross revenue. They don't have the funds on hand to pay that much in taxes. They only have around $80 thousand that they've set aside to pay their taxes with.

And so they tell the grouos to spend the rest of their budgets.

Then, when it comes time to submit their records to the IRS, because of the final spending spree, their net revenue is $200 thousand.

That means that with a 30% corporate taxe rate, they'd only have to pay $60 thousand.

That's half of what they should have paid, considering they met their corporate growth numbers while operating underbudget and $20 thousand less than what they budgeted for.

So that $20k goes into yearly bonuses.

Several companies, Netflix for example, utilized this system to their advantage. When Netflix was first starting out as a streaming service, they purposely went in the red while expanding their company. Doing so gave them several tax cuts that they could use in the future once they stopped recklessly expanding and started reporting net profits.

There's also taxes. Companies get tax cuts if their net revenue is below a certain point.

Basically, if a company makes a gross revenue of $1 million, but their operation costs were $750 thousand, then they get taxed on the $250 thousand that was their net revenue.

A lot of companies, such as Netflix when they started out, will take advantage of this system. They will purposely spend money to recklessly grow their catalogue, causing them to be in the red by the time taxes are due. Which gives them tax breaks that don't reflect the reality of how they are purposely gaming the system.