Succession and investment in New Zealand farming

William Wright and P Brown

New Zealand Economic Papers, 2019, vol. 53, issue 2, 203-214

Abstract: Farms in New Zealand are traditionally run as family businesses in which land and capital are handed down from one generation to the next. Such family businesses have time horizons that are measured in generations rather than years, and the identification of a successor encourages long-term planning that farms without successors cannot justify. Simultaneously, farms that invest in productive capital have higher future earnings potential, ceteris paribus, and therefore be more attractive to potential successors. Both of these relationships imply a correlation between succession planning and investment. In this paper we separate the causal effect succession planning has on investment using two-stage ordered probit regression with instrumental variables, namely, the extent farmers report they farm due to family tradition and the number of generations that the family has farmed in New Zealand. Our results show that the presence of a successor does in fact raise investment.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/00779954.2017.1419501 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:53:y:2019:i:2:p:203-214

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RNZP20

DOI: 10.1080/00779954.2017.1419501

Access Statistics for this article

New Zealand Economic Papers is currently edited by Dennis Wesselbaum

More articles in New Zealand Economic Papers from Taylor & Francis Journals
Bibliographic data for series maintained by ().