ON THE FINANCIAL PERFORMANCE OF PRIVATE ENTERPRISES IN CHINA

Hung-Gay Fung, Xiaoqing Eleanor Xu () and Qi-Zi Zhang
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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

Journal of Developmental Entrepreneurship (JDE), 2007, vol. 12, issue 04, 399-414

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.

Keywords: Private enterprises; Chinese entrepreneurs; social capital; financial capital; human capital (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (14)

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DOI: 10.1142/S1084946707000782

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