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Does horizontal cooperation create value? A residual income approach application on Czech agricultural data

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Author Info

  • Kamila Ruzickova

    ()
    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

  • Petr Korab

    ()
    (Department of Finance, Faculty of Business and Economics, Mendel University in Brno)

Abstract

In the context of current competitive environment the companies in agriculture are forced to find a path towards the improvement of their business competitiveness. One of illuminating examples may be the horizontal cooperation in the form of cooperative entity. Naturally, as the economic performance of the group rises, the economic performance of members should rise, too. However, the crucial point is whether these members create a value for the owners, as this is the primary company objective. In this paper, we provide unique comparison of application of a residual income valuation method to empirically verify the assumptions which lead to grouping agricultural enterprises in cooperative entity. There are two objects of research: firstly, the alliance of winemakers, their individual members cooperating in marketing and sales management with the aim of boosting their economic performance, and secondly, their business rivals, who decided not to enter the alliance and cooperate. Alliance V8 is a newly-established NGO grouping top Moravian winemakers, the only of its kind in the Czech Republic. Contrasting the results of the case study research of both objects of research reveals whether joining the alliance altered the value of their members and also examines the applicability of the valuation method. Classification-JEL: G32, Q13

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Bibliographic Info

Paper provided by Mendel University in Brno, Faculty of Business and Economics in its series MENDELU Working Papers in Business and Economics with number 2013-32.

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Length: 12
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:men:wpaper:32_2013

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Keywords: company value; co-operative entity; horizontal cooperation; residual income.;

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