In this study, we examine the effects of default risks of KOSPI firms in Korea using firm level data from 1991 until 2007 on the use of catering expenses in their operation. Although the expenses are defined and regulated through corporate tax law for the purpose of taxation, they are treated as a representative of unethical operation of firms by the management. Firms are believed to spend more budgets on catering related parties for favorable supports, ethical or unethical, and thus the related expenses are expected to increase as their default risks increase. We tested their effects with fixed effects panel model, focusing on their role around the IMF crisis in Korea during late 1990s using default risks estimated by using variables reflecting ownership structure, capital structure, profitability, leverage, etc. after controling for SBC or soft budget constraint problems which are supposed to have existed prior to the IMF financial crisis. We find that the estimated default risks have a positive relation catering expenses before and after the criris, while the higher default risks of firms after the crisis have no statistically significant additional effect on catering expenses. The overall use of catering expenses measured relatively to total sales has decreased after the crisis, thus implying that the use of operation expenses in Korea has become more transparent and/or ethical after the crisis than before.