Accounting Information and the Prediction of Farm Viability

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Accounting Information and the Prediction of Farm Viability

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Josep M. Argilés

Abstract

Until recently farm management made little use of accounting and agriculture has been largely excluded from the scope of accounting standards. This article examines the current use of accounting in agriculture and points the need to establish accounting standards for agriculture. Empirical evidence shows that accounting can make a significant contribution to agricultural management and farm viability and could also be important for other agents involved in agricultural decision making. Existing literature on failure prediction models and farm viability prediction studies provide the starting point for our research, in which two dichotomous logit models were applied to subsamples of viable and unviable farms in Catalonia, Spain. The first model considered only non-financial variables, while the other also considered financial ones. When accounting variables were added to the model, a significant reduction in deviance was observed.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 277.

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Date of creation: Mar 1998
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Handle: RePEc:upf:upfgen:277

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M40 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - General

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Eric J. Slof & Josep M. Argilés, 1998. "An Analysis of the Accounting Principles Applied by the European Farm Accountancy Data Network," Economics Working Papers 342, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 1998. [Downloadable!]
Josep M. Argilés & Eric J. Slof, 2000. "New Opportunities for Farm Accounting," Economics Working Papers 497, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]

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