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Financial structure, production, and productivity: evidence from the U.S. food manufacturing industry

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  • Ferdaus Hossain
  • Ruchi Jain
  • Ramu Govindasamy

Abstract

This study integrates production and financing to examine the impacts of financial structure change on the production, profitability, and productivity growth in the U.S. food manufacturing industry. Empirical results show that during the period covered by this study, agency cost associated with increased debt use by this industry negatively affected its output growth, input demand, profitability, and overall productivity growth. Dividend payment positively contributed to the production and performance of this industry via signaling benefit. However, the negative effects of increased debt use by this industry far outweighed the positive contribution of dividend payment. The U.S. food industry achieved a 0.9% average annual productivity growth, which came primarily from technological progress and capital adjustment. The rapid increase in debt use by this industry was responsible for slowing down the pace of productivity growth via its negative contribution to the total factor productivity growth. Capital expansion was the principal driver of output growth and profitability in this industry.

Suggested Citation

  • Ferdaus Hossain & Ruchi Jain & Ramu Govindasamy, 2005. "Financial structure, production, and productivity: evidence from the U.S. food manufacturing industry," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 399-410, November.
    • Handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:399-410
    DOI: 10.1111/j.1574-0864.2005.00080.x
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    References listed on IDEAS

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    1. Bernstein, J.I. & Nadiri, M.I., 1993. "Production, Financial Structure and Productivity Growth in U.S. Manufacturing," Working Papers 93-10, C.V. Starr Center for Applied Economics, New York University.
    2. Martin Feldstein, 1987. "Introduction to "The Effects of Taxation on Capital Accumulation"," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 1-6, National Bureau of Economic Research, Inc.
    3. Martin Feldstein, 1987. "The Effects of Taxation on Capital Accumulation," NBER Books, National Bureau of Economic Research, Inc, number feld87-1.
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    Cited by:

    1. Guo, Shu & Zhang, ZhongXiang, 2023. "Green credit policy and total factor productivity: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 128(C).
    2. Engida, Tadesse Getacher & Rao, Xudong & Oude Lansink, Alfons G.J.M., 2020. "A dynamic by-production framework for analyzing inefficiency associated with corporate social responsibility," European Journal of Operational Research, Elsevier, vol. 287(3), pages 1170-1179.
    3. Jin, Shaosheng & Guo, Haiyue & Delgado, Michael S. & Wang, H. Holly, 2017. "Benefit or damage? The productivity effects of FDI in the Chinese food industry," Food Policy, Elsevier, vol. 68(C), pages 1-9.
    4. Małgorzata Juchniewicz & Katarzyna Łukiewska, 2021. "Diversity of the international competitive performance of the food industry of the European Union member states," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 422-437, April.
    5. Lopez, Rigoberto A., 2022. "The Dimensions of Productivity Change in the U.S. Food Manufacturing Industries," 2023 Allied Social Sciences Association (ASSA) Annual Meeting, January 6-8, 2023, New Orleans, Louisiana 316831, Agricultural and Applied Economics Association.
    6. Jordi Jaumandreu & Rigoberto Lopez, 2024. "Markups in US food manufacturing accounting for non‐neutral productivity," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(2), pages 573-591, June.
    7. MCarmen Martínez‐Victoria & Alfons Oude Lansink, 2024. "Risk and return efficiency of manufacturing firms: Integrating corporate social responsibility performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3735-3744, September.
    8. Konstantinos N. Konstantakis & Panagiotis T. Cheilas & Ioannis G. Melissaropoulos & Panos Xidonas & Panayotis G. Michaelides, 2023. "Supply chains and fake news: a novel input–output neural network approach for the US food sector," Annals of Operations Research, Springer, vol. 327(2), pages 779-794, August.
    9. Papageorgiou, Theofanis & Michaelides, Panayotis G. & Milios, John, 2009. "Economic Fluctuations, Cyclical Regularities and Technological Change: The U.S. Food Sector (1958–2006)," MPRA Paper 67115, University Library of Munich, Germany.

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