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Macroeconomic Conditions And Agribusiness Profitability: An Analysis Using Pooled Data

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  • Neibergs, J. Shannon

Abstract

Theoretical and empirical insights into the linkages between firm profitability and macroeconomic conditions are developed for nineteen agribusinesses. The hypothesis investigated in this analysis is that firm financial performance is a function of firm specific factors and macroeconomic conditions common to all firms. Seemingly unrelated regression with an unequal number of observations is used to estimate macroeconomic linkages. Empirical results indicate that macroeconomic conditions have differing affects on firm profitability dependent on a firmÂ’s financial structure and the market segment in which it operates. Capital intensive industries and highly leveraged firms have higher business risk and are more susceptible to macroeconomic conditions.

Suggested Citation

  • Neibergs, J. Shannon, 1998. "Macroeconomic Conditions And Agribusiness Profitability: An Analysis Using Pooled Data," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 1(01).
  • Handle: RePEc:ags:ifaamr:34310
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    File URL: http://purl.umn.edu/34310
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    References listed on IDEAS

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    1. Chambers, Robert G. & Just, Richard E., 1982. "An investigation of the effect of monetary factors on agriculture," Journal of Monetary Economics, Elsevier, vol. 9(2), pages 235-247.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    3. Bordo, Michael David, 1980. "The Effects of Monetary Change on Relative Commodity Prices and the Role of Long-Term Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1088-1109, December.
    4. Orden, David, 1986. "Money and Agriculture: The Dynamics of Money Financial Market-Agricultural Trade Linkages," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 3.
    5. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
    6. Richard C. Barnett & David A. Bessler & Robert L. Thompson, 1983. "The Money Supply and Nominal Agricultural Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 303-307.
    7. Gordon C. Rausser & James A. Chalfant & H. Alan Love & Kostas G. Stamoulis, 1986. "Macroeconomic Linkages, Taxes, and Subsidies in the U.S. Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 399-412.
    8. Schmidt, Peter, 1977. "Estimation of seemingly unrelated regressions with unequal numbers of observations," Journal of Econometrics, Elsevier, vol. 5(3), pages 365-377, May.
    9. D. Lynn Forster, 1996. "Capital structure, business risk, and investor returns for agribusinesses," Agribusiness, John Wiley & Sons, Ltd., vol. 12(5), pages 429-442.
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    Cited by:

    1. Bruce Bjornson & Michael E. Sykuta, 2002. "Growth by acquisition and the performance of large food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 263-281.

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    Keywords

    Agribusiness;

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