IDEAS home Printed from https://ideas.repec.org/p/ags/aaea14/170170.html
   My bibliography  Save this paper

Is Farm Management Skill Persistent?

Author

Listed:
  • Li, Xin
  • Paulson, Nicholas

Abstract

Farm management skills can affect farm managers' performance. In this article, farm management performance is analyzed based on yearly Illinois Farm Business Farm Management (FBFM) panel data across 6,760 farms from 1996 through 2011. Two out-of-sample measures of skill are used to analyze the ability of farm managers that consistently perform well over yearly and longer time horizons. Persistence tests show management skills are consistent and predictable. Results also suggest that the most skilled managers often generate better financial results.

Suggested Citation

  • Li, Xin & Paulson, Nicholas, 2014. "Is Farm Management Skill Persistent?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170170, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:170170
    DOI: 10.22004/ag.econ.170170
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/170170/files/Xin_AAEA2014.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.170170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Purdy, Barry M. & Langemeier, Michael R. & Featherstone, Allen M., 1997. "Financial Performance, Risk, And Specialization," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(1), pages 1-13, July.
    2. Mishra, Ashok K. & El-Osta, Hisham S. & Johnson, James D., 1999. "Factors Contributing To Earnings Success Of Cash Grain Farms," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(3), pages 1-15, December.
    3. Michael C. Jensen, 1968. "The Performance Of Mutual Funds In The Period 1945–1964," Journal of Finance, American Finance Association, vol. 23(2), pages 389-416, May.
    4. H. Frederick Gale, 2003. "Age-Specific Patterns of Exit and Entry in U.S. Farming, 1978–1997," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 168-186.
    5. Paul N. Ellinger & Vishwanath Tirupattur, 2009. "An Overview of the Linkages of the Global Financial Crisis to Production Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1399-1405.
    6. Kemp, David R. & Girdwood, John & Parton, Kevin A. & Charry, Al A., 2004. "Farm Management: rethinking directions?," AFBM Journal, Australasian Farm Business Management Network, vol. 1, pages 1-8.
    7. Urcola, Hernan A. & Schnitkey, Gary D. & Irwin, Scott H. & Sherrick, Bruce J., 2004. "Testing for Yield Persistency: Is It Skill or is It Luck?," 2004 Annual meeting, August 1-4, Denver, CO 19991, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Philip Garcia & Steven T. Sonka & Man Sik Yoo, 1982. "Farm Size, Tenure, and Economic Efficiency in a Sample of Illinois Grain Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 119-123.
    9. Nicholas D. Paulson & Bruce J. Sherrick, 2009. "Impacts of the Financial Crisis on Risk Capacity and Exposure in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1414-1421.
    10. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    11. Barry K. Goodwin & Allen M. Featherstone & Kimberly Zeuli, 2002. "Producer Experience, Learning by Doing, and Yield Performance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 660-678.
    12. Joao Martines-Filho, 2006. "The Performance of Agricultural Market Advisory Services in Corn and Soybeans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 162-181.
    13. Robert Kosowski & Allan Timmermann & Russ Wermers & Hal White, 2006. "Can Mutual Fund “Stars” Really Pick Stocks? New Evidence from a Bootstrap Analysis," Journal of Finance, American Finance Association, vol. 61(6), pages 2551-2595, December.
    14. Grinblatt, Mark & Titman, Sheridan, 1992. "The Persistence of Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 47(5), pages 1977-1984, December.
    15. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    16. Elton, Edwin J & Gruber, Martin J & Rentzler, Joel C, 1987. "Professionally Managed, Publicly Traded Commodity Funds," The Journal of Business, University of Chicago Press, vol. 60(2), pages 175-199, April.
    17. Brown, Stephen J, et al, 1992. "Survivorship Bias in Performance Studies," The Review of Financial Studies, Society for Financial Studies, vol. 5(4), pages 553-580.
    18. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    19. Malcolm, Bill, 2004. "Farm Management analysis: a core discipline, simple sums, sophisticated thinking," AFBM Journal, Australasian Farm Business Management Network, vol. 1, pages 1-10.
    20. Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes & Batts, Ryan M., 2006. "The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2004," AgMAS Project Research Reports 37513, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    21. Nicole M. Aulerich & Scott H. Irwin & Philip Garcia, 2013. "Returns to individual traders in agricultural futures markets: skill or luck?," Applied Economics, Taylor & Francis Journals, vol. 45(25), pages 3650-3666, September.
    22. Malkiel, Burton G, 1995. "Returns from Investing in Equity Mutual Funds 1971 to 1991," Journal of Finance, American Finance Association, vol. 50(2), pages 549-572, June.
    23. Carpenter, Jennifer N. & Lynch, Anthony W., 1999. "Survivorship bias and attrition effects in measures of performance persistence," Journal of Financial Economics, Elsevier, vol. 54(3), pages 337-374, December.
    24. Ford, Stephen A. & Shonkwiler, J. S., 1994. "The Effect of Managerial Ability on Farm Financial Success," Agricultural and Resource Economics Review, Cambridge University Press, vol. 23(2), pages 150-157, October.
    25. Grinblatt, Mark & Titman, Sheridan & Wermers, Russ, 1995. "Momentum Investment Strategies, Portfolio Performance, and Herding: A Study of Mutual Fund Behavior," American Economic Review, American Economic Association, vol. 85(5), pages 1088-1105, December.
    26. Bruce J. Sherrick & Peter J. Barry & Paul N. Ellinger & Gary D. Schnitkey, 2004. "Factors Influencing Farmers' Crop Insurance Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 103-114.
    27. Steven T. Sonka & Robert H. Hornbaker & Michael A. Hudson, 1989. "Managerial Performance and Income Variability for a Sample of Illinois Cash Grain Producers," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 11(1), pages 37-47.
    28. Lewis T. Cunningham & B. Wade Brorsen & Kim B. Anderson, 2007. "Cash Marketing Styles and Performance Persistence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 624-636.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ibendahl, Gregory, 2016. "Using Solvency Ratios to Predict Future Profitability," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015, pages 1-7.
    2. Griffin, Terry & Ibendahl, Gregg & Stabel, Jayce, 2016. "Kansas Farm Profitability Persistence: Do Top Farms Remain Top Farms?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230108, Southern Agricultural Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Xi & Paulson, Nicholas & Schnitkey, Gary, 2015. "Is Farm Management Skill Persistent?," 2015 Conference, August 9-14, 2015, Milan, Italy 212047, International Association of Agricultural Economists.
    2. Vidal-García, Javier & Vidal, Marta & Boubaker, Sabri & Uddin, Gazi Salah, 2016. "The short-term persistence of international mutual fund performance," Economic Modelling, Elsevier, vol. 52(PB), pages 926-938.
    3. Roberto Casarin & Andrea Piva & Loriana Pelizzon, 2008. "Italian Equity Funds: Efficiency and Performance Persistence," The IUP Journal of Financial Economics, IUP Publications, vol. 0(1), pages 7-28, March.
    4. Omneya Abdelsalam & Meryem Duygun & Juan Carlos Matallín-Sáez & Emili Tortosa-Ausina, 2014. "Is Ethical Money Sensitive to Past Returns? The Case of Portfolio Constraints and Persistence of Islamic and Socially Responsible Funds," Working Papers 2014/19, Economics Department, Universitat Jaume I, Castellón (Spain).
    5. Hung, Pi-Hsia & Lien, Donald & Kuo, Ming-Sin, 2020. "Window dressing in equity mutual funds," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 338-354.
    6. Feng, Xunan & Johansson, Anders C., 2015. "Can mutual funds pick stocks in China? Evidence from the IPO market," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 170-186.
    7. Pi‐Hsia Hung & Donald Lien & Yun‐Ju Chien, 2020. "Portfolio concentration and fund manager performance," Review of Financial Economics, John Wiley & Sons, vol. 38(3), pages 423-451, July.
    8. Omneya Abdelsalam & Meryem Duygun & Juan Carlos Matallín-Sáez & Emili Tortosa-Ausina, 2017. "Is Ethical Money Sensitive to Past Returns? The Case of Portfolio Constraints and Persistence in Islamic Funds," Journal of Financial Services Research, Springer;Western Finance Association, vol. 51(3), pages 363-384, June.
    9. Fletcher, Jonathan & Forbes, David, 2002. "An exploration of the persistence of UK unit trust performance," Journal of Empirical Finance, Elsevier, vol. 9(5), pages 475-493, December.
    10. Chris Bilson & Angela Frino & Richard Heaney, 2005. "Australian retail fund performance persistence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(1), pages 25-42, March.
    11. Cuthbertson, Keith & Nitzsche, Dirk & O'Sullivan, Niall, 2008. "UK mutual fund performance: Skill or luck?," Journal of Empirical Finance, Elsevier, vol. 15(4), pages 613-634, September.
    12. Hammouda, Amira & Saeed, Asif & Vidal, Marta & Vidal-García, Javier, 2023. "On the short-term persistence of mutual fund performance in Europe," Research in International Business and Finance, Elsevier, vol. 65(C).
    13. Lehmann, Bruce & Timmermann, Allan, 2007. "Performance measurement and evaluation," LSE Research Online Documents on Economics 24505, London School of Economics and Political Science, LSE Library.
    14. Blake, David & Caulfield, Tristan & Ioannidis, Christos & Tonks, Ian, 2014. "Improved inference in the evaluation of mutual fund performance using panel bootstrap methods," Journal of Econometrics, Elsevier, vol. 183(2), pages 202-210.
    15. Du, Ding & Huang, Zhaodan & Blanchfield, Peter J., 2009. "Do fixed income mutual fund managers have managerial skills?," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 378-397, May.
    16. Dong‐Hyun Ahn & H. Henry Cao & Stéphane Chrétien, 2009. "Portfolio Performance Measurement: a No Arbitrage Bounds Approach," European Financial Management, European Financial Management Association, vol. 15(2), pages 298-339, March.
    17. Wolfgang Bessler & Thomas Conlon & Diego Víctor de Mingo‐López & Juan Carlos Matallín‐Sáez, 2022. "Mutual fund performance and changes in factor exposure," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 45(1), pages 17-52, March.
    18. Hunter, David & Kandel, Eugene & Kandel, Shmuel & Wermers, Russ, 2009. "Endogenous benchmarks," CFR Working Papers 10-02, University of Cologne, Centre for Financial Research (CFR).
    19. Alda, Mercedes & Andreu, Laura & Sarto, José Luis, 2017. "Learning about individual managers’ performance in UK pension funds: The importance of specialization," The North American Journal of Economics and Finance, Elsevier, vol. 42(C), pages 654-667.
    20. Matallín-Sáez, Juan Carlos & Soler-Domínguez, Amparo & Tortosa-Ausina, Emili, 2016. "On the robustness of persistence in mutual fund performance," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 192-231.

    More about this item

    Keywords

    Agribusiness; Agricultural Finance; Crop Production/Industries; Farm Management; Financial Economics; Production Economics;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea14:170170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.