Governance Control Mechanisms in Portuguese Agricultural Credit Cooperatives
AbstractOver the last decade Portuguese Agricultural Credit Cooperatives (ACCs) have increasingly face survival challenges related to their difficulty in gathering equity. The main source of ACCs equity is the net benefit; thus, understanding how ACCs governance can work on correcting bad economic performance is of crucial importance to overcome this constraint. The main objective of this paper is to describe the governance control mechanisms in the ACCs. Five governance mechanisms are identified: board and chairman change (internal mechanisms), central ACC intervention by an agent or by management board replacement and merger. Empirical analysis proved that the internal governance mechanisms activity is not related to the ACC performance. Additionally: (a) ACCs with a central ACC agent and merged ACCs hold a weaker credit management and a heavy administrative costs structure and profitability problems; and (b) ACCs with a management board replacement by the central ACC hold a weaker credit management and present solvency problems.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25338.
Date of creation: 2006
Date of revision:
cooperatives; credit; governance; multinomial logit; Agricultural Finance; D23; L29 ;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
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