Cooperative Mergers and Acquisitions: The Role of Capital Constraints

Timothy Richards and Mark Manfredo

Journal of Agricultural and Resource Economics, 2003, vol. 28, issue 01, 17

Abstract: Several explanations for merger activity exist for publicly traded firms, but none consider the unique aspects of cooperatives. This study develops a test for the hypothesis that cooperative consolidation occurs primarily in response to capital constraints associated with a lack of access to external equity capital. An empirical model estimates the shadow value of long-term investment capital within a multinomial logit model of transaction choice in a panel data set of the 100 largest U.S. cooperatives. The results substantially confirm the capital-constraint hypothesis. Thus, the primary implication is that internal growth may be a more viable alternative to consolidation if new forms of cooperative financing are developed.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:30718

DOI: 10.22004/ag.econ.30718

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