Investment activity and ownership structure of Czech corporate farms

Jarmila Curtiss, Laure Latruffe, Thomas Medonos and Tomas Ratinger
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Thomas Medonos: VUZE - Research Institute of Agricultural Economics
Tomas Ratinger: JRC - European Commission - Joint Research Centre [Seville]

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Abstract: This paper aims at assessing the relationship between ownership structure, performance and investment activity. In particular it studies how behavioural differences between farms related to ownership structure influence farms' investment activity and thus their further development potential resulting in farm structural changes. The paper analyses a sample of corporate farms over 7 years, 1997-2003, using structural model of three equations including investment accelerator model. This model considers the effect of ownership on (a) technical efficiency as proxy for the quality of operational management, (b) returns on capital as proxy for quality of financial management, (c) investment activity, and (d) investment sensitivity to internal funds as proxy for owners/managers opposition to credit financing. The empirical results provide evidence of a theoretically justifiable positive effect of ownership concentration on investment activity and farms' economic performance, and a theoretically consistent effect of external/employee ownership on technical performance. However, the authors are not able to confirm empirically the theoretically based effect of external/employee ownership on farm investment activity.

Keywords: CORPORATE OWNERSHIP; EMPLOYEE OWNERSHIP; EXTERNAL OWNERSHIP; AGENCY PROBLEM; INVESTMENT BEHAVIOR; FINANCIAL CONSTRAINT (search for similar items in EconPapers)
Date: 2007-09-06
Note: View the original document on HAL open archive server: https://hal.science/hal-02416848v1
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Citations: View citations in EconPapers (2)

Published in Joint seminar IAAE-EAAE, 104. Seminar of the European Association of Agricultural Economics (EAAE): Agricultural Economics and Transition: What was expected, what we observed, the lessons learned, Sep 2007, Budapest, Hungary. 15 p

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Working Paper: Investment Activity and Ownership Structure of Czech Corporate Farms (2007)
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