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The comparative financial performance of cooperatives and investor-owned firms (IOFs) in the fruit and vegetable processing and the dairy industries was analyzed for the years 1976 through 1987. Contrary to theoretical expectations, the cooperatives in both industries were found to perform as well as or better than the comparable IOFs by profitability, leverage, and interest coverage measures. No clear evidence was found of the hypothesized overinvestment in fixed assets or pronounced moral hazard behavior in cooperatives. The lack of significant differences in profitability between the two types of firms suggests that cooperatives may be following goals similar to IOFs.

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