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The determinants of external private equity financing in agricultural production businesses

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  • Mondelli, Mario P.
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    Abstract

    This study investigates the determinants that influence a firm’s decision to use external private equity in agriculture. The use of external equity as a funding source in agriculture has increased since 1990; however, the literature addressing this phenomenon is limited. The asset specificity approach (Williamson 1988) offers insightful contributions to understand the choice of financial mechanisms. Specifically, financial structure is related to asset specificity, the extent to which assets are redeployable to alternative uses, a particularly important attribute in agricultural production. I construct an international dataset of companies that receive external private equity finance to test the determinants of using external equity finance. Results show that the attributes of the assets involved in agriculture are important determinants of financing choices.

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    File URL: http://purl.umn.edu/127135
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    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 127135.

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    Date of creation: May 2012
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    Handle: RePEc:ags:iaae12:127135
    Contact details of provider: Web page: http://www.iaae-agecon.org/Email:


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    Keywords: asset specificity; external equity; agricultural finance; Agribusiness; Agricultural Finance; Financial Economics; Institutional and Behavioral Economics; D23; Q14; G24; G32;

    Find related papers by JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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