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Asymmetric Information, Capital Structure And Agricultural Investment

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  • Lagerkvist, Carl Johan
  • Olson, Kent D.

Abstract

This paper explicitly models the interdependent finance and investment decision in order to increase the understanding on how fluctuations in agricultural investment are attributable to changes in financial decisions. Euler equations for investment and finance are estimated by the use of the GMM technique on an unbalanced panel data set for 342 farm operations in Southwestern Minnesota for the 1989-1998 period.

Suggested Citation

  • Lagerkvist, Carl Johan & Olson, Kent D., 2001. "Asymmetric Information, Capital Structure And Agricultural Investment," 2001 Annual meeting, August 5-8, Chicago, IL 20652, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20652
    DOI: 10.22004/ag.econ.20652
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    References listed on IDEAS

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    1. Hubbard, R Glenn & Kashyap, Anil K, 1992. "Internal Net Worth and the Investment Process: An Application to U.S. Agriculture," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 506-534, June.
    2. Chirinko, Robert S, 1993. "Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1875-1911, December.
    3. Hans Andersson & Kent D. Olson, 1996. "On Comparing Farm Record Association Members to the Farm Population," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 18(2), pages 259-264.
    4. Alfons Oude Lansink & Spiro E. Stefanou, 1997. "Asymmetric Adjustment of Dynamic Factors at the Firm Level," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1340-1351.
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    7. Phimister, Euan, 1995. "The Impact of Borrowing Constraints on Farm Households: A Life-Cycle Approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 22(1), pages 61-86.
    8. Benjamin, Catherine & Phimister, Euan, 1997. "Transaction Costs, Farm Finance and Investment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(3-4), pages 453-466.
    9. Haramillo, Fidel & Schiantarelli, Fabio & Weiss, Andrew, 1996. "Capital market imperfections before and after financial liberalization: An Euler equation approach to panel data for Ecuadorian firms," Journal of Development Economics, Elsevier, vol. 51(2), pages 367-386, December.
    10. Olson, Kent D. & Tvedt, Douglas D., 1987. "On Comparing Farm Management Associations And The Farm Population," Staff Papers 13456, University of Minnesota, Department of Applied Economics.
    11. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    12. Kanniainen, Vesa & Sodersten, Jan, 1994. "Costs of monitoring and corporate taxation," Journal of Public Economics, Elsevier, vol. 55(2), pages 307-321, October.
    13. Peter J. Barry & C. B. Baker & Luis R. Sanint, 1981. "Farmers' Credit Risks and Liquidity Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 216-227.
    14. Bester, Helmut, 1987. "The role of collateral in credit markets with imperfect information," European Economic Review, Elsevier, vol. 31(4), pages 887-899, June.
    15. Farrell E. Jensen & John S. Lawson & Larry N. Langemeier, 1993. "Agricultural Investment and Internal Cash Flow Variables," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(2), pages 295-306.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    17. Geert Thijssen, 1996. "Farmers' Investment Behavior: An Empirical Assessment of Two Specifications of Expectations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 166-174.
    18. Ralph Bierlen & Allen M. Featherstone, 1998. "Fundamental q, Cash Flow, and Investment: Evidence from Farm Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 427-435, August.
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    Cited by:

    1. Hüttel, Silke & Mußhoff, Oliver & Odening, Martin & Zinych, Nataliya, 2008. "Estimating investment equations in imperfect capital markets," SFB 649 Discussion Papers 2008-016, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    2. Lagerkvist, Carl Johan & Olson, Kent D., 2002. "Optimal Capital Structure And Income Support Reform Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19694, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Zinych, Nataliya & Odening, Martin, 2009. "How Costly are (Agricultural) Investments during Economic Transition? A Critical Literature Appraisal," 2009 Conference, August 16-22, 2009, Beijing, China 50319, International Association of Agricultural Economists.
    4. repec:hum:wpaper:sfb649dp2008-016 is not listed on IDEAS
    5. Hinrichs, J. & Mußhoff, O. & Odening, M., 2006. "Ökonomische Hysterese in der deutschen Veredlungsproduktion," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 41, March.

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    Keywords

    Agricultural Finance;

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