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Do more highly educated entrepreneurs matter?
Author(s) -
Lin Faqin,
Huang Can,
He Xiaobo,
Zhang Chao
Publication year - 2013
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/apel.12023
Subject(s) - propensity score matching , matching (statistics) , percentage point , revenue , identification (biology) , equity (law) , demographic economics , higher education , business , econometrics , marketing , economics , actuarial science , statistics , mathematics , finance , economic growth , botany , political science , law , biology
This paper uses a unique micro dataset of Chinese private firms surveyed in 2000 to investigate whether having a more highly educated entrepreneur affects a firm's performance. Identifying educational effects has been shown to be empirically challenging because it is difficult to overcome the likely omitted variable bias problem. We use the propensity score matching method to get around this identification problem. Matching results imply that on average, the firms whose owners received higher education had 5.2–5.8 percentage points higher return on equity, 115–126 percentage points higher profits, and 102–111 percentage points higher sales revenue, respectively, than firms that did not have higher educated entrepreneurs.