The Financial and Operating Performance of Chinese Family-Owned Listed Firms

Abstract

While existing studies often use sector-level data to explain the phenomenal growth of the Chinese private sector, this paper complements the literature by using firmlevel data to conduct a comparative study of performance between family-owned and state-owned firms in China. Taking a population comprising listed firms for the period 1999-2004, we analyze financial and operating performance with reference to five measures: (1) revenue per employee, (2) revenue per unit of cost, (3) net profit per employee, (4) return on assets, and (5) market-to-book ratio. Having controlled for other firm characteristics, such as size, leverage, firm age, sales volatility, innovation and marketing, institutional environment and industry, our results confirm that family-owned firms achieve significantly better performances than state-owned enterprises. These results support the general consensus that China is increasingly reliant on private companies as an engine for economic growth and an employment hub. © Gabler Verlag 2008.