Whitman School of Management at Syracuse University
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Abstract Details

On the Financial Performance of Private Enterprises in China
Vol. Volume 12, Number 4 December/2007

Hung-Gay Fung, Xiaoqing Eleanor Xu and Qi-Zi Zhang
Using the 2002 and 2000 comprehensive survey s 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 4 0 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. E ntrepreneurs 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.