What determines the capital structure of farms? Empirical evidence from Poland

Geoffroy Enjolras, Gilles Sanfilippo () and Michał Soliwoda ()
Additional contact information
Gilles Sanfilippo: CERAG, Grenoble INP-IAE, Univ. Grenoble Alpes, Grenoble, France
Michał Soliwoda: Faculty of Economics and Sociology, Corporate Finance Department, University of Lodz, Lodz, Poland

Baltic Journal of Economics, 2021, vol. 21, issue 2, 113-133

Abstract: The purpose of this paper is to analyse capital structure and its dynamics for farms in Poland, a leading European Union producer. The theoretical framework is based on the trade-off and pecking order theories of capital structure. We use data from the Farm Accountancy Data Network (FADN), which is representative of Polish professional farms during the period 2009–2018. We adopt a dynamic partial adjustment model using the generalized method of moments in order to explain the financing of farms through debt. The results show that Polish farms exhibit low target levels of debt, which they adjust dynamically, thus partially validating the trade-off theory. While size and growth opportunities positively influence the indebtedness of farms, profitability and land have the opposite effect. Polish farmers therefore use available internal funds, especially retained earnings, as a substitute for debt, in line with the pecking order theory.

Keywords: Capital structure; financing; farms; Poland (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.tandfonline.com/doi/pdf/10.1080/140609 ... 2587?needAccess=true (application/pdf)

Related works:
Working Paper: What determines the capital structure of farms? Empirical evidence from Poland (2021)
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:bic:journl:v:21:y:2021:i:2:p:113-133

Access Statistics for this article

More articles in Baltic Journal of Economics from Baltic International Centre for Economic Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by Anna Zasova ().