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Testing capital structure theories for agricultural cooperatives

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  • Cheng, Yuxi (Lance)
  • Katchova, Ani L.

Abstract

This study investigates adjustments in capital structures for agricultural cooperatives and differences before and during the agricultural downturn which started in 2013. We estimate a simultaneous equation model to test for cooperatives’ capital structure strategies based on two main theories from the corporate finance literature: the trade-off theory and the pecking order theory. Estimation results reveal that agricultural cooperatives in the U.S. generally adjust to short-term financial targets for equity and debt, supporting the trade-off theory while there is little support for the pecking order theory within the agricultural cooperatives sector.

Suggested Citation

  • Cheng, Yuxi (Lance) & Katchova, Ani L., 2018. "Testing capital structure theories for agricultural cooperatives," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 22(1), September.
    • Handle: RePEc:ags:ifaamr:284922
    DOI: 10.22004/ag.econ.284922
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    Keywords

    Agribusiness;

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