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

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 firm-level 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, the authors 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. turn 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, their 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.