Abstract
Several explanations for merger activity exist for publicly traded firms, but none consider the unique aspects of cooperatives. This study develops a test for the hypothesis that cooperative consolidation occurs primarily in response to capital constraints associated with a lack of access to external equity capital. An empirical model estimates the shadow value of long-term investment capital within a multinomial logit model of transaction choice in a panel data set of the 100 largest U.S. cooperatives. The results substantially confirm the capital-constraint hypothesis. Thus, the primary implication is that internal growth may be a more viable alternative to consolidation if new forms of cooperative financing are developed.
Original language | English (US) |
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Pages (from-to) | 152-168 |
Number of pages | 17 |
Journal | Journal of Agricultural and Resource Economics |
Volume | 28 |
Issue number | 1 |
State | Published - Apr 1 2003 |
Keywords
- Capital structure
- Cooperative
- Discrete choice
- Joint ventures
- Mergers
- Multinomial logit
- Strategic alliances
ASJC Scopus subject areas
- Animal Science and Zoology
- Agronomy and Crop Science
- Economics and Econometrics