The dynamics of listed SMEs in China

We examine the dynamics of Chinese listed SMEs with respect to their post-market viability and growth after going public. The Kaplan–Meier estimation shows that SMEs are more likely to transition to a non-viable state than large firms. Further examination using the Cox model and the random effects model shows that SME dynamics are shaped by heterogeneous firm and industry characteristics, as well as the underlying financial and institutional environments. SME viability is distinguished by its ability to grow through learning along with age, aided by lower business risk, more focused business, easier access to equity finance, and less exposure to competition in remote regions. SME growth is constrained by a dispersed ownership structure, insufficient infrastructure to protect firms which are active in R&D, and the limited financing role of equity markets. The study also reveals that government initiatives in support of strategic development in the service industries and in the coastal regions are of importance in spurring SME growth.