TESTING FOR THE PRESENCE OF FINANCIAL CONSTRAINTS IN U.S

Fabio Ribas Chaddad and Michael L. Cook

No 26045, Working Papers from University of Missouri Columbia, Department of Agricultural Economics

Abstract: It is commonly argued in the literature that agricultural cooperatives are financially constrained because they are unable to acquire sufficient risk capital to invest in productive assets. This study examines whether agricultural cooperatives' investment is constrained by estimating neoclassical and cash flow augmented Q investment models. Panel data regression results suggest that cooperative physical capital investment responds positively and significantly to both the marginal profitability of capital and cash flow. Results also indicate that all cooperative sub-samples face binding financial constraints when making investment decisions, but some cooperatives appear to be less financially constrained than others. The empirical analysis of the cooperative financial constraint hypothesis suggests that eliminating restrictions on residual claims might be a necessary condition for the attenuation of capital constraints in agricultural cooperatives.

Keywords: Agribusiness (search for similar items in EconPapers)
Pages: 31
Date: 2002
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:umcowp:26045

DOI: 10.22004/ag.econ.26045

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