Evaluation of Capital Structure of Agricultural Cooperatives

J. StekláM. GryčováJ. Homolka


No 3/2015, September
pp. 37-48

Steklá J., Gryčová M., Homolka J. (2015) "Evaluation of Capital Structure of Agricultural Cooperatives“, AGRIS on-line Papers in Economics and Informatics, Vol. 7, No. 3, pp. 37 – 48. ISSN 1804-1930

Abstract

One of the major factors, which affect the economic effectiveness, is suitable capital facilities of enterprises. In case of correct adjustment of capital structure, more precisely the ratio of equity capital and foreign capital, it is necessary take into account a number of factors which operate on the structure of capital, for example a variety of funding sources. The main aim of this paper is to analyze the development of the capital structure and capital disparity across the farmers' cooperatives from fourteen regions of the Czech Republic for time series 2009 – 2013. For this analysis is used the debt leverage indicators and method of comparative statics. Data are obtained and processed from the database of enterprises of Albertina. The financial and economic crisis lowered the debt to equity ratio and debt to assets ratio and the profitability ratios as well and the indicators reports V-shaped trend. The disparity of the ratio values among regions at the end of the monitored period seems not to be changed. Usually Prague as the region with the highest GDP per capita during the monitored period reports usually the extreme values in most ratios and higher deviations in debt ratios and lower deviations in profitability ratios. Also the impact of capital structure indicators on the profitability of cooperatives seems to be not significant during the monitored period.

Keywords

Capital structure, disparity, farmers′ cooperatives, regions.

References

  1. Abor, J. The Effect of Capital Structure on Profitability: An Empirical Analysis of Listed Firms in Ghana. Journal of Risk Finance. 2005, Vol. 6, No. 5, p. 438-445. ISSN 1526-5943. DOI 10.1108/15265940510633505.
  2. Baker, M., Wurgler, J. Market Timing and Capital Structure. Journal of Finance. 2002, Vol. 57, No. 1, p. 1-32. ISSN 1540-6261. DOI 10.1111/1540-6261.00414.
  3. DeAngelo, H., DeAngelo, L. Capital Structure, Payout Policy, and Financial Flexibility. Marshall School of Business, FBE Working Paper. 2007, Vol. 02-06. DOI 10.2139/ssrn.916093.
  4. Donaldson, G. Corporate Debt Ccapacity: A Study of Corporate Debt Policy and the Determination of Corporate Debt Capacity. Boston: Harvard University, Beard Books. 1961.ISBN 978-158-7980-343.
  5. Fama, E. F., French, K. R. Financing Decisions: Who Issues Stock? Journal of Financial Economics. 2005, Vol. 76, No. 3, p. 549-582. ISSN 0304-405X. DOI 10.1016/j.jfineco.2004.10.003.
  6. Faulkender, M., Wang, R. Corporate Financial Policy and the Value of Cash. Journal of Finance. 2006, Vol. 61, No. 4, p. 1957-1990. ISSN 1540-6261. DOI 10.1111/j.1540-6261.2006.00894.x.
  7. Gill, A., Biger, N., Mathur, N. The effect of capital structure on profitability: Evidence from the United States. International Journal of Management. 2011, Vol. 28, No. 4, p. 3-15. ISSN 1468-2370.
  8. Graham, J. R., Leary, M. T. A review of empirical capital structure research and directions for the future. Annual Review of Financial Economics. 2011, Vol. 3, No. 1, p. 309-345. ISSN 1058-3300. DOI 10.1146/annurev-financial-102710-144821.
  9. Gurčík, L′. G-index – the financial situation prognosis method of agricultural enterprises. Agricultural Economics. 2002, Vol. 48, No. 8, p. 373-378. ISSN 1574-0862. DOI 10.17221/5338-AGRICECON.
  10. Guthmann, H. G., Dougall, H. E. Corporate Financial Policy, 3th ed. New York: Prentice-Hall, 1955.
  11. Hirschey, M. Managerial Economics. 12th ed. New York: Cengage Learning, 2008. ISBN 978-0-324-58886-6.
  12. Choi, H. The Kraus-Litzenberger Zero-Sum Trade-Off Theory. Social Science Research Network. 2015. ISSN 1556 5068. DOI 10.2139/ssrn.2566590.
  13. Chrastinová, Z. Economic and Financial Position of Agricultural Enterprises in the Period before the Accession to the European Union. Agricultural Economics. 2004, Vol. 50, No. 11, pp. 486-494. ISSN 1574-0862. DOI 10.17221/5238-AGRICECON.
  14. Jensen, M. C., Meckling, W. H. Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 1976, Vol. 3, No. 4, pp. 305-360. ISSN 0304-405X. DOI 10.1016/0304-405X(76)90026-X.
  15. King, B. P., Rosopa, P. J., Minium E. W. Statistical Reasoning in the Behavioral Sciences. 6th ed. New York: John Wiley and Sons. 2011. ISBN 978-1-118137-48-2.
  16. Kraus, A., Litzenberger, R. H. A State Preference Model of Optimal Financial Leverage. Journal of Finance. 1973, Vol. 28, No. 4, pp. 911-922. ISSN 1540-6261. DOI 10.1111/j.1540-6261.1973.tb01415.x.
  17. Lang, T. A., Secic, M. How to Report Statistics in Medicine: Annotated Guidelines for Authors, Editors, and Reviewers. 2nd ed. New York: ACP Press,. 2006. ISBN 1-930513-69-0.
  18. Leavy, A. M. Indexing Distributions of Data: Preservice Teachers' Notions of Representativeness. School Science and Mathematics. 2004, Vol. 104, No. 3, p. 119-134. ISSN 1949-8594. DOI 10.1111/j.1949-8594.2004.tb17992.x.
  19. Lemmon, M. L., Roberts, M. R., Zender J. F. Back to the Beginning: Persistence and the Cross-Section of Corporate Capital Structure. Journal of Finance. 2008, Vol. 63, No. 4, p. 1575-1608. ISSN 1540-6261. DOI 10.1111/j.1540-6261.2008.01369.x.
  20. Mohammadzadeh, M. et al. The Effect of Capital Structure on the Profitability of Pharmaceutical Companies The Case of Iran. Iranian Journal of Pharmaceutical Research. 2013, Vol. 12, No. 3, p. 573-577. ISSN 1726-6890.
  21. Minton, B. A., Wruck, K. H. Financial Conservatism: Evidence on Capital Structure from Low Leverage Firms. Ohio State University, 2001. DOI 10.2139/ssrn.269608.
  22. Morellec, E. Can Managerial Discretion Explain Observed Leverage Ratios? Review of Financial Studies. 2004, Vol. 17, No. 1, p. 257-294. ISSN 1465-7368. DOI 10.1093/rfs/hhg036.
  23. Myers, S. C., Majluf, N. S. Corporate Financing and Investment Decisions when Firms Have Information that Investors do not Have. Journal of Financial Economics. 1984, Vol. 13, No. 2, p. 187-221. ISSN 0304-405X. DOI 10.1016/0304-405X(84)90023-0.
  24. Peterson, P. P., Fabozzi, F. J. Analysis of Financial Statements. 1st ed. New York: Wiley, 1999. ISBN 978-1-883249-59-5.
  25. Regionální vyhodnocení výsledků FSS, 2013 [Online]. Available: https://www.czso.cz/documents/10180/26566189/27016815k06.pdf/198a30ba-f379-4723-89e7-f4413d5ac744?version=1.1 [Accessed: 24 August 2015].
  26. Rosochatecká, E. Economic Efficiency of Agricultural Enterprises and Its Evaluation. Agricultural Economics. 2002, Vol. 48, No. 3, p. 97-101. ISSN 1574-0862. DOI 10.17221/5455-AGRICECON.
  27. Shivdasani, A., Stefanescu, I. How do Pensions affect corporate capital structure decisions? Review of Financial Studies. 2010, Vol. 23, No. 3, p. 1287-1323. ISSN 1465-7368. DOI 10.1093/rfs/hhp094.
  28. Statistické ročenky, Český statistický úřad, 2014 [Online]. Available: https://www.czso.cz/csu/czso/katalog-produktu [Accessed: 24 August 2015].
  29. Taani, K. Capital Structure Effects on Banking Performance: A Case Study of Jordan. International Journal of Economics, Finance and Management Sciences. 2013, Vol. 1, No. 5, p. 227-233. ISSN 2326-956. DOI 10.11648/j.ijefm.20130105.13.
  30. Využití obhospodařované zemědělské půdy, 2013 [Online]. Available: https://www.czso.cz/documents/10180/25404471/27016614086.pdf/84d6c849-884a-4a04-8f84-b14f28f4e3fd?version=1.0 [Accessed: 24 August 2015].
  31. Welch, I. Two Common Problems in Capital Structure Research: The Financial-Debt-To-Asset Ratio and Issuing Activity versus Leverage Changes. International Review of Finance. 2011, Vol. 11, No. 1, p. 1-17. ISSN 1468-2443. DOI 10.1111/j.1468-2443.2010.01125.x.

Full paper

  Full paper (.pdf, 387.62 KB).