Financial Structure of Farm Businesses under Imperfect Capital Markets

Barry, Peter J.; Bierlen, Ralph W.; Sotomayor, Narda L.

doi:10.1111/0002-9092.00091

Cited by 73 publications

(66 citation statements)

References 26 publications

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“…One possible explanation is that there are significant increasing returns to scale in agricultural production and that government payments-which provide cash and perhaps also increase leverage for loansrelieve borrowing constraints and allow some farms to transition more quickly to an efficient scale. This explanation would be consistent with studies finding increasing returns to scale (e.g., Morrison Paul et al 2004;Morrison Paul and Nehring 2005) and liquidity constraints in agriculture (e.g., Hubbard and Kashyap 1992;Bierlen and Featherstone 1998;Barry, Bierlen, and Sotomayor 2000;Roberts and Key 2002).…”

Section: Discussionsupporting

confidence: 89%

Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis

Roberts

Key

2008

American J Agri Economics

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Over the last twenty years, both crop production and agricultural payments have shifted toward larger operations. This study examines whether payments from federal farm programs contributed to increased concentration of cropland and farmland. Using zip code—level data constructed from the microfiles of the 1987–2002 agriculture censuses we examine the association between government payments per acre and subsequent growth in land concentration. A semiparametric generalized additive model (GAM) controls for location and historical concentration, sales per acre, and ratio of cropland area to zip code area. Findings indicate, both with and without nonparametric controls, government payments are strongly associated with subsequent concentration growth. Copyright 2008, Oxford University Press.

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Section: Discussionsupporting

confidence: 89%

Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis

Roberts

Key

2008

American J Agri Economics

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“…The tax shield effect has an influence on the choice of financing sources and, therefore, on the weighted average cost of capital (Barry et al 2000). Farms in Poland do not pay income tax, 2 as they are subject to agricultural tax charged on the basis of the arable land area and location within a specified tax region (Wasilewski et al 2016).…”

Section: Understanding the Cost Of Capitalmentioning

confidence: 99%

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

2018

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This paper proposes a methodology for calculating the cost of equity for unlisted agricultural companies in Poland. An analysis of a fixed effects panel model was conducted on a sample of 79 agricultural enterprises from the Farm Accountancy Data Network (FADN) field of observation in 2012-2015. The empirical model includes a value of land, agricultural area, depreciation, sale earnings, and payables. The study confirmed that in the valuation of the cost of equity capital in agricultural enterprises, factors that are specific to this sector must be taken into account. As the basic source of production is agricultural land, it must be taken into consideration while estimating the cost of equity capital. This factor was included in the theoretical model.

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“…Financial characteristics Previous studies found that cash flow was a significant determinant of machinery investment (Barry et al, 2000;Bierlen and Featherstone, 1998). Cash flow is typically used as a proxy for investment opportunity using net present value as a base for calculating cash flows.…”

Section: Impact Of the Section 179 Tax Deductionmentioning

confidence: 99%

Impact of the Section 179 tax deduction on machinery investment

Hadrich

Larsen

Olson

2013

Agricultural Finance Review

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Purpose -The purposes of this paper are to determine the financial, structural, and tax policy factors that influence the probability of buying machinery and the intensity of the machinery purchases on North Dakota farming operations. Design/methodology/approach -A double hurdle model was used to estimate the two decisions: purchasing machinery and the intensity of the machinery purchase. Data were collected from the North Dakota Farm and Ranch Management Business Association Annual Summaries for 1993-2011. Findings -Results demonstrated that the tax incentive provided by Section 179 deduction had the largest positive effect on machinery purchases when compared to operating profit margin, leverage ratio, producer type, and experience of the principal operator of the farm. Originality/value -Section 179 deductions have changed substantially over the 19-year period studied and have not been analyzed in previous machinery investment work. This analysis puts a numerical value on the effect of Section 179 deductions over time and demonstrates the large effect tax incentives have on machinery purchase decisions and levels.

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Financial Structure of Farm Businesses under Imperfect Capital Markets

Cited by 73 publications

References 26 publications

Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis

Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis

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

Impact of the Section 179 tax deduction on machinery investment

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