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On The Financial Performance Of Private Enterprises In China

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Author Info

  • HUNG-GAY FUNG

    (College of Business Administration, University of Missouri-St. Louis, One University Blvd, St. Louis, MO 63121, USA)

  • XIAOQING ELEANOR XU

    ()
    (Stillman School of Business, Seton Hall University, 400 South Orange Avenue, South Orange, NJ 07079, USA)

  • QI-ZI ZHANG

    (Institute of Industrial Economics, Chinese Academy of Social Sciences, No. 2 Yuetan Beixaiojie, Beijing, 100836, China)

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    Abstract

    Using the comprehensive 2000 and 2002 surveys of Chinese entrepreneurs conducted by the National Association of Private Entrepreneurs and the Chinese Academy of Social Sciences, we examine the characteristics and financial performance of private enterprises in China. Entrepreneurs, on average, are 40 years old and many are well-educated; more than one-third of them have a college degree or higher. Their companies are young, with an average age of six to seven years. Entrepreneurs contribute most of the equity capital to the private firms, which in general, are profitable with an average return on assets of 16 percent in 2002 and 11 percent in 2000. Further empirical analysis demonstrates the important impact of social, financing and human capital on firms' financial performance. We find that social capital (measured by charitable contributions), financing capital (measured by the equity-to-total capital ratio), and human capital have significant effects on firm profitability, and younger entrepreneurs tend to be more successful in the new Chinese market economy.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Journal of Developmental Entrepreneurship.

    Volume (Year): 12 (2007)
    Issue (Month): 04 ()
    Pages: 399-414

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    Handle: RePEc:wsi:jdexxx:v:12:y:2007:i:04:p:399-414

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    Related research

    Keywords: Private enterprises; Chinese entrepreneurs; social capital; financial capital; human capital;

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    Cited by:
    1. Karen Wang & Yue Wang & Kai-Ping Huang & Jingsong Deng, 2012. "Heterogeneous networks and resource acquisition of SMEs in emerging economies," Quality & Quantity: International Journal of Methodology, Springer, vol. 46(5), pages 1643-1657, August.
    2. Unger, Jens M. & Rauch, Andreas & Frese, Michael & Rosenbusch, Nina, 2011. "Human capital and entrepreneurial success: A meta-analytical review," Journal of Business Venturing, Elsevier, vol. 26(3), pages 341-358, May.
    3. Mayer-Haug, Katrin & Read, Stuart & Brinckmann, Jan & Dew, Nicholas & Grichnik, Dietmar, 2013. "Entrepreneurial talent and venture performance: A meta-analytic investigation of SMEs," Research Policy, Elsevier, vol. 42(6), pages 1251-1273.
    4. Jun Du & Alessandra Guariglia & Alexander Newman, . "Does social capital affect the financing decisions of Chinese small and medium-sized enterprises?," Discussion Papers 10/13, University of Nottingham, GEP.
    5. Doong, Shuh-Chyi & Fung, Hung-Gay & Wu, Jr-Ya, 2011. "Are social, financial, and human capital value enhancing? Evidence from Taiwanese firms," International Review of Economics & Finance, Elsevier, vol. 20(3), pages 395-405, June.
    6. Clement Chow & Michael Fung & Kevin Lam & Heibatollah Sami, 2012. "Investment opportunity set, political connection and business policies of private enterprises in China," Review of Quantitative Finance and Accounting, Springer, vol. 38(3), pages 367-389, April.

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