Growth and Survival Determinants of Chinese Private Firms: Fieldwork evidence and econometric estimates

This paper reports on one of the first empirical attempts to investigate small firm growth and survival, and their determinants, in the Peoples’ Republic of China. The work is based on field work evidence gathered from a sample of 83 Chinese private firms (mainly SMEs) collected initially by face-to-face interviews, and subsequently by follow-up telephone interviews a year later. We extend the models of Gibrat (1931) and Jovanovic (1982), which traditionally focus on size and age alone (e.g. Brock and Evans, 1986), to a ‘comprehensive’ growth model with two types of additional explanatory variables: firm-specific (e.g. business planning); and environmental (e.g. choice of location). We estimate two econometric models: a ‘basic’ age-size-growth model; and a ‘comprehensive’ growth model, using Heckman’s two-step regression procedure. Estimation is by log-linear regression on cross-section data, with corrections for sample selection bias and heteroskedasticity. Our results refute a pure Gibrat model (but support a more general variant) and support the learning model, as regards the consequences of size and age for growth; and our extension to a comprehensive model highlights the importance of location choice and customer orientation for the growth of Chinese private firms. In the latter model, growth is explained by variables like planning, R&D orientation, market competition, elasticity of demand etc. as well as by control variables. Our work on small firm growth achieves two things. First, it upholds the validity of ‘basic’ size-age-growth models, and successfully applies them to the Chinese economy. Second, it extends the compass of such models to a ‘comprehensive’ growth model incorporating firm-specific and environmental variables.

Financial Distress in Chinese Industry: Microeconomic, Macroeconomic and Institutional Infuences

We study the impact of both microeconomic factors and the macroeconomy on the financial distress of Chinese listed companies over a period of massive economic transition, 1995 to 2006. Based on an economic model of financial distress under the institutional setting of state protection against exit, and using our own firm-level measure of distress, we find important impacts of firm characteristics, macroeconomic instability and institutional factors on the hazard rate of financial distress. The results are robust to unobserved heterogeneity at the firm level, as well as those shared by firms in similar macroeconomic founding conditions. Comparison with related studies for other economies highlights important policy implications.

Optimism and commitment: An elementary theory of bargaining and war

We propose an elementary theory of wars fought by fully rational contenders. Two parties play a Markov game that combines stages of bargaining with stages where one side has the ability to impose surrender on the other. Under uncertainty and incomplete information, in the unique equilibrium of the game, long confrontations occur: war arises when reality disappoints initial (rational) optimism, and it persist longer when both agents are optimists but reality proves both wrong. Bargaining proposals that are rejected initially might eventually be accepted after several periods of confrontation. We provide an explicit computation of the equilibrium, evaluating the probability of war, and its expected losses as a function of i) the costs of confrontation, ii) the asymmetry of the split imposed under surrender, and iii) the strengths of contenders at attack and defense. Changes in these parameters display non-monotonic effects.

Does China overinvest? Evidence from a panel of Chinese firms

This paper addresses the hotly-debated question: do Chinese firms overinvest? A firm-level dataset of 100,000 firms over the period of 2000-07 is employed for this purpose. We initially calculate measures of investment efficiency, which is typically negatively associated with overinvestment. Despite wide disparities across various ownership groups, industries and regions, we find that corporate investment in China has become increasingly efficient over time. However, based on direct measures of overinvestment that we subsequently calculate, we find evidence of overinvestment for all types of firms, even in the most efficient and most profitable private sector. We find that the free cash flow hypothesis provides a good explanation for China‟s overinvestment, especially for the private sector, while in the state sector, overinvestment is attributable to the poor screening and monitoring of enterprises by banks.

Extending contingency: the impact of strategy, technology, size and business environment on the organisational form of small Chinese firms

This paper is inspired by articles in the last decade or so that have argued for more attention to theory, and to empirical analysis, within the well-known, and long-lasting, contingency framework for explaining the organisational form of the firm. Its contribution is to extend contingency analysis in three ways: (a) by empirically testing it, using explicit econometric modelling (rather than case study evidence) involving estimation by ordered probit analysis; (b) by extending its scope from large firms to SMEs; (c) by extending its applications from Western economic contexts, to an emerging economy context, using field work evidence from China. It calibrates organizational form in a new way, as an ordinal dependent variable, and also utilises new measures of familiar contingency factors from the literature (i.e. Environment, Strategy, Size and Technology) as the independent variables. An ordered probit model of contingency was constructed, and estimated by maximum likelihood, using a cross section of 83 private Chinese firms. The probit was found to be a good fit to the data, and displayed significant coefficients with plausible interpretations for key variables under all the four categories of contingency analysis, namely Environment, Strategy, Size and Technology. Thus we have generalised the contingency model, in terms of specification, interpretation and applications area.

Growth and Survival Determinants of Chinese Private Firms: Fieldwork evidence and econometric estimates

This paper reports on one of the first empirical attempts to investigate small firm growth and survival, and their determinants, in the Peoples’ Republic of China. The work is based on field work evidence gathered from a sample of 83 Chinese private firms (mainly SMEs) collected initially by face-to-face interviews, and subsequently by follow-up telephone interviews a year later. We extend the models of Gibrat (1931) and Jovanovic (1982), which traditionally focus on size and age alone (e.g. Brock and Evans, 1986), to a ‘comprehensive’ growth model with two types of additional explanatory variables: firm-specific (e.g. business planning); and environmental (e.g. choice of location). We estimate two econometric models: a ‘basic’ age-size-growth model; and a ‘comprehensive’ growth model, using Heckman’s two-step regression procedure. Estimation is by log-linear regression on cross-section data, with corrections for sample selection bias and heteroskedasticity. Our results refute a pure Gibrat model (but support a more general variant) and support the learning model, as regards the consequences of size and age for growth; and our extension to a comprehensive model highlights the importance of location choice and customer orientation for the growth of Chinese private firms. In the latter model, growth is explained by variables like planning, R&D orientation, market competition, elasticity of demand etc. as well as by control variables. Our work on small firm growth achieves two things. First, it upholds the validity of ‘basic’ size-age-growth models, and successfully applies them to the Chinese economy. Second, it extends the compass of such models to a ‘comprehensive’ growth model incorporating firm-specific and environmental variables.

Suppliers of Priors: A Theory of Retailing Inspired by the Market for Chinese Antiquities

Adverse selection may thwart trade between an informed seller, who knows the probability p that an item of antiquity is genuine, and an uninformed buyer, who does not know p. The buyer might not be wholly uninformed, however. Suppose he can perform a simple inspection, a test of his own: the probability that an item passes the test is g if the item is genuine, but only f < g if it is fake. Given that the buyer is no expert, his test may have little power: f may be close to g. Unfortunately, without much power, the buyer's test will not resolve the difficulty of adverse selection; gains from trade may remain unexploited. But now consider a "store", where the seller groups a number of items, perhaps all with the same quality, the same probability p of being genuine. (We show that in equilibrium the seller will choose to group items in this manner.) Now the buyer can conduct his test across a large sample, perhaps all, of a group of items in the seller's store. He can thereby assess the overall quality of these items; he can invert the aggregate of his test results to uncover the underlying p; he can form a "prior". There is thus no longer asymmetric information between seller and buyer: gains from trade can be exploited. This is our theory of retailing: by grouping items together - setting up a store - a seller is able to supply buyers with priors, as well as the items themselves. We show that the weaker the power of the buyer�s test (the closer f is to g), the greater the seller�s profit. So the seller has no incentive to assist the buyer � e.g., by performing her own tests on the items, or by cleaning them to reveal more about their true age. The paper ends with an analysis of which sellers should specialise in which qualities. We show that quality will be low in busy locations and high in expensive locations.

Traditional Chinese materia medica: a retrospect and prospect

For thousands of years, traditional medicine and remedies have been practed and used in the fight against disease in China. They have proved to be valuable and the distillate of vast historical experience based on field-tested human experiments, long-term observations and clinical trials. The Chinese people belive that traditional medicine is consistent with theirown culture. Endowed with a unique theoretical system and provided outstanding clinical results, traditional Chinese medicine continues to play an important role in helping the Chinese nation flourish. The recent study of traditional medicinal plants in Chine has given us confidence that what was recorded in ancient medical literature through empirical observations is indeed still coindicent with the concepts of modern chemistry, pharmacology and medicine. The task of revealing what is valid and efficacious should be retained, and what is mythic and invalid should be discarded in traditional Chinese medicine may require scientific research lasting for several generations. Therfore, multidisciplinary cooperation and international collaboration in this field would be essential. Systematic coordination of work in traditional medicine by word organizations, national governments, private foundations and individual scientists is a requisite as well.

Studies on bioactive components from Chinese medicinal plants

Several novel bioactive components isolated from Chinese medicinal plants will be presented. These include novel maytansinoid tumor, inhibitors, some new ent-kaurane and rosane diterpenoids from Mallotus anomalus Meer et Chun (Euphorbiaceae), as well asnovel insecticide, stemona alkaloids from Stemona parviflora C. H. Wright (Stemonaceae). Both are native plants of Hainan island, Chine. 2D NMR techniques such as mono and hetero-COSY, NOESY, COLOC as well as H-NMR line broadening effect were utilized for structure elucidation. The separation techniques, struture elucidations and bioassay results will be reported.

Immunomodulating Chinese herbal medicines

Traditional Chinese medicine always pays close attention to the strengthening of the patient"s general resitence against illness, ther are many Chinese herbs used for thousands of years are considered as tonics. Animal experiments and modern clinica; trails have shown that quite a number herbs are immunologically active, and most of the tonics are excellent immunomodulating agents, such as polysaccharides or saponins isolated from Astragalus mongholicus, Acanthopanax senticosus and Panax notoginseng, which stimulated mactophages, promoted antibody formation, actived complement and increased T lymphocyte proliferation. Moreover, some of them were proved to be anti-irradiative and protected animals from liver intoxications. On the other hand, some anti-inflammative or anti-pyretic hervs such as Tripterygium wilfordii, Aconitum and Artemiasiae species were proved to have immunosuppressive principles, some of them were now used clinically for the treatment of rheumatoid arthritis, chronic nephritis, systemic lupus erythematosis and various skin disorders. Pharmacological studies revealed that they have depressant effect on most of the humoral-immunity but not on the cell-mediated immunity. Some of them stimulated adrenal cortex functions and prolonged the survival time of transplanted allograft tissues.

The research on radioprotective agents in Chinese materia medica

A series of studies has been carried out in the field of traditional medicine for searching radio-protective agents. According to the theory of traditional Chinese medicine, may prescriptions were tested with experimental animals. Some of them could raise the survival rate of dogs irradiated with lethal dose of Pi-rays by 30-40%. Some symptoms of radiation sickness could be improved. More than one thousand kinds of Chinese herbs were screened. Some of them have pronounced radioprotectice activities. A series of bioactive components wee isolated from these herbs. The mechanism of radiation protection were studied. Having the capability of hemopoietic system and immune system may be the characteristics of these Chinese herbs.

Some progress on the chemistry of natural bioactive terpenoids form Chinese medicinal plants

(1) Pseudolaric acids - Novel diterpenes, Pseudolaric acid A, B, C and D were isolated from Pseudolarix kaempferi Gorden (pinaceae). Their structures were assigned by spectroscopic data and chemical correlations. In the contineous studies, the absolute configurations, the conformations in the solutions, the framentation mechanisms of MS and assigments of all NMR spectral signals were also reported. They showed the antifungal and cytotoxic activities. (2) Daphnane diterpenes - In the further studies on the plants of Thymelaeaceae, besides 10 known diterpenes, 16 new daphnane diterpenes were isolated from Daphne genkwa, D. tangutica, D. giraldii, Wikstroemie chamaedaphne. They showed the antifertilities activities. (3) Tripterygium diterpenes 14 new diterpenes were isolated from Triperygium wilfordii, T. regeli and T. hypoglaucum. Some of them showed the antitumor activities. The CD spectra showed that A/B ring of all compoundshave trans configuration as same as tripdiolide and triptolide determined by X-ray diffraction (4) Pregnane glycosides from Marsdenia koi - Two new pregnane glycosides marsdenikoiside A and marsdenikoiside B which can terminate the early pregnancy were isolated from Marsdeia koi. Their structures were elucidated by hydrolysis and spectroscopic methods.

Bioactive glycosides from Chinese medicines

Glycosides are the bioactive components of many famous Chinese medicines. Here reported are some bioactive glycosides we discovered from Chinese medicines in recent years. (1) Pheolic glycosides from Chinese medicines: Gastrodia elata, acontium austroynanense and Helicia erratica, three bioactive phenolic glycosides were discovered and two of them have been developed into new drugs. (2) Terpenoidal glycosides: a) Monoterpenoid: the sweroside from Swertia mollensis has been developed intro an anti-hepatitis drug; b) Diterpenoid: Phlomis betonicoides contains sweet glycoides; c) Triterpenoid: many biologically active triterpenoid glycosides were isolated from Panax plants and Siraitia grosvenorii. (3) Steroidal glycosides: a) C21-steroid: Cynanchum otophyllum and C. atratrum contain anti-epilepsy and-tumor glycosides; b) C27-steroid Hemostatic saponins were found in Paris polyphylla.

How to Read Bible stories

A welcome supplement to the bestselling How to Read the OT and How to Read the NT, indicating more recent developments in biblical studies especially in the area of narrative criticism.