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Risk and Equity in Agricultural Cooperatives

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  • Parliament, Claudia
  • Lerman, Zvi

Abstract

This research examines the effect of risk on the proportion of equity held by agricultural cooperatives. The measured components of risk are business risk and the financial risk that is dependent on the proportion of debt in the cooperative's capital structure. The empirical results indicate the proportion of equity is inversely related to financial risk and positively related to business risk. These risk effects are estimated to differ based on the commodity handled by the cooperative. No significant relation between the proportion of equity and whether or not the cooperative operates on a pooling basis is estimated.

Suggested Citation

  • Parliament, Claudia & Lerman, Zvi, 1992. "Risk and Equity in Agricultural Cooperatives," Working Papers 232674, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    • Handle: RePEc:ags:huaewp:232674
    DOI: 10.22004/ag.econ.232674
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    References listed on IDEAS

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    1. Sporleder, Thomas L. & Malick, William M. & Tough, Cynthia H., 1988. "Relationship of Pooling to Equity Capital and Current Assets of Large Producer Marketing Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 3, pages 1-11.
    2. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development.
    3. Lerman, Zvi & Parliament, Claudia, 1991. "Size and industry effects in the performance of agricultural cooperatives," Agricultural Economics, Blackwell, vol. 6(1), pages 15-29, October.
    4. Schrader, Lee F., 1989. "Equity Capital and Restructuring of Cooperatives as Investor-Oriented Firms," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 4, pages 1-13.
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    Cited by:

    1. Franken, Jason R.V. & Cook, Michael L., 2015. "Investment Constraints in Agricultural Cooperatives," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205427, Agricultural and Applied Economics Association.
    2. Jeffrey P. Katz, 1997. "Managerial behavior and strategy choices in agribusiness cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 13(5), pages 483-495.
    3. Sporleder, Thomas L. & Goldsmith, Peter D., 1990. "The Risk Mitigation Aspects of Agricultural Cooperatives," Cooperatives: Their Importance in the Future Food and Agricultural System - FAMC 1990 Conference 265910, Food and Agricultural Marketing Consortium (FAMC).
    4. Neves, Mateus de Carvalho & Braga, Marcelo J., 2015. "Assessing public policy impacts: one application of Cooperatives Participating of Agricultural Cooperatives Capitalization Program (Procap-Agro) in Brazil," 2015 Conference, August 9-14, 2015, Milan, Italy 212528, International Association of Agricultural Economists.
    5. Russo, Carlo & Sabbatini, Massimo, 2005. "Incentives to Efficient Investment Decisions in Agricultural Cooperatives," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24455, European Association of Agricultural Economists.
    6. Srinivasan, R., 2011. "The Cost of Risky Debt in Cooperatives," Journal of Cooperatives, NCERA-210, vol. 25, pages 1-16.

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    Risk and Uncertainty;

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