Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

Franc-Dąbrowska, Justyna; Mądra-Sawicka, Magdalena; Bereżnicka, Joanna

doi:10.3390/economies6030037

Cited by 9 publications

(6 citation statements)

References 40 publications

(47 reference statements)

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“…It is also worth mentioning that all of the enterprises are family businesses, in which family members are hired, and also that previous generations of these families were also involved in meat processing. This fits with a wider pattern of food production in Poland, wherein agricultural entrepreneurs are strongly emotionally attached to their resources (Franc-Dąbrowska et al, 2018). What is more, all of the entrepreneurs have been formally educated in meat processing techniques, and thus qualify as specialists in the sector.…”

Section: Resultssupporting

confidence: 58%

Marginal, localized and restricted activity

Drejerska

Bareja-Wawryszuk

Gołębiewski

2019

BFJ

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Purpose The purpose of this paper is to investigate marginal, localized and restricted (MLR) activities in pork processing on local food markets in Poland, and identify the value generated for individual links in the supply chain. Design/methodology/approach The paper takes a case study approach to investigate the enterprises operating as MLRs. Data were collected during direct interviews with entrepreneurs in Siedlce county, in the Mazovian Region in Poland. The methodology of the basic Business Model Canvas (BMC) was applied to distinguish the two models they operate within direct and with an agent. Findings The results of the research process led to identification of customer value generated by MLR activities. For example, directness, authenticity and high quality, which are the main features that differentiate MLR from conventional activities. Research limitations/implications The case studies selected for the research were typical of their local food system (LFS). However, it can be expected that the processes described herein can also be found in the various different environments of other small and medium enterprises. Practical implications The models worked out during the research process fit perfectly into the assumptions of sustainable rural development, and their implementation could be a source of competitive advantages in LFS. Originality/value While MLR activities are usually characterized by the legal perspective, less is known about their operation in practice. This is the first academic study in Poland investigating MLR business models. With application of the BMC, this analysis could be used as a tool guide for building similar models on local food markets. Studies of business models for pork processing could provide inspiration for both academics and practitioners dealing in other food sectors.

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Section: Resultssupporting

confidence: 58%

Marginal, localized and restricted activity

Drejerska

Bareja-Wawryszuk

Gołębiewski

2019

BFJ

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“…WACC estimation is divided into two parts: debt cost and equity cost. The cost of equity capital could be investigated from multiple perspectives, given its accounting and financial research [47]. In our WACC calculation, the authors used the Capital Asset Pricing Model (CAPM) method that measures the return of an investor's portfolio.…”

Section: Cost Of Capital-methods Reviewmentioning

confidence: 99%

Energy Sector Risk and Cost of Capital Assessment—Companies and Investors Perspective

2021

Self Cite

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This paper aims to identify the costs of capital in a group of companies from the energy sector by including an investor and market risk approach. The study also concerns the company’s Weighted Average Cost of Capital (WACC) cost intra-industry analysis related to sector characteristics such as total assets, revenues, market capitalization, and companies’ age. In order to assess the intergroup relationships, basic correlation relationships were compared and a nonparametric test of variance was performed. The period under study covered the years 2015–2019. The conducted research evaluates groups of companies that dedicated their activity to a particular energy intra-industry division under numerous regulations in Europe. The study contributes to assessing the level of risk among energy listed companies in European capital markets based on capital structure valuation. The study results underline the role of the cost of equity financing, which was twice as high as the cost of debt. The highest WACC was related to the Beta indicator that also expressed the political and regulatory risk over the investigated period. Across debt cost analysis, the role of effective tax rate decreased the level of WACC. The highest level of WACC was noticed among uranium and integrated oil and gas companies. The study contributes to information asymmetry theory related to the cost of capital assumptions.

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“…Nevertheless, long-term interest rates or government bonds are close to the risk-free rate rather than considering the risky nature of agriculture. So, the cost of equity should be higher than the risk of investments in bonds (Alekneviciene et al 2018;Franc-Dąbrowska et al 2018). The opportunity cost of own land can be measured as regional land rent paid.…”

Section: Productivitymentioning

confidence: 99%

Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review

Špička¹,

Hlavsa²,

Soukupova³

et al. 2019

AGR ECON-CZECH

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Estimation of farm economic sustainability and viability became more topical when redesigning the Common Agricultural Policy which should stabilise farm income and make agribusiness more viable and sustainable (typically in Czech areas facing natural constraints). The key question is how to calculate the income of farms or farm households not only to survive but also to grow sustainably. The article summarises and compares knowledge from 51 studies to provide a comprehensive discussion on different ways how to measure economic viability and sustainability to set income support for farms in the areas with natural constraints optimally. The authors found family farms and off-farm income as important limitations of FADN database (Farm Accountancy Data Network) for evaluation of the economic sustainability of farm household. Moreover, some financial ratios (Return on Assets – ROA and assets turnover) are not suitable viability indicators for farms with a high share of hired land (typically large legal entities). Joining family farms and legal entities, the authors recommend using modified Farm Net Value Added (MFNVA) allowing for opportunity costs of own land and non-land assets. The average wage in the economy or region is a better proxy for opportunity labour costs of unpaid work rather than average agricultural wage.<br />

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Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

Cited by 9 publications

References 40 publications

Marginal, localized and restricted activity

Marginal, localized and restricted activity

Energy Sector Risk and Cost of Capital Assessment—Companies and Investors Perspective

Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review

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