Chinese SMEs’ Uses of Financial Statements to Make Decisions
Vol. Volume 19, Number 4 December/2014
Howard Van Auken & Kui Yang
With a sample of 46 Chinese small to medium-sized enterprises (SMEs), this study examines factors that might affect firms’ use of financial statements to make decisions. Financial statements contain insightful information about potential risk and return implications of various decisions. A logit analysis shows that owners of Chinese SMEs use financial statements to make decisions according to the frequency of financial statement information available and their ability to interpret the information contained in the financial statements. These results can help owners of SMEs, educators, and service providers understand which factors affect the use of financial statements and the process by which financial statements get incorporated into SMEs’ decisions.
Financing, financial statements, decision making, international.