Assessing Cash Holdings in Agribusiness

By using fixed-effects panel regression, we model cash holdings for agribusiness firms during the 1970-2012 period. The results suggest that agribusiness firms manage cash in a manner consistent with the precautionary theory of caution management. Specifically, agribusiness firms hold cash to quickly execute growth opportunities and limit transaction costs of acquiring capital for growth. Furthermore, a subset of cash-rich agribusiness firms, which concentrates 78.5% of the aggregate cash and 49% of total revenues, is analyzed with a logit model. Results of cash-rich agribusiness deviate from predictions by the precautionary theory. This finding has potential implications for structural changes in this sector.

ifamr, ifama
Issue Date:
Nov 01 2015
Publication Type:
Journal Article
DOI and Other Identifiers:
(ISSN#:1559-2448) (Other)
Record Identifier:
PURL Identifier:
Published in:
International Food and Agribusiness Management Review, Volume 18, Issue 4
Page range:
Total Pages:
JEL Codes:
G; L; Q10
The IFAMR is published quarterly by the International Food and Agribusiness Management Association. For more information visit:
Series Statement:
Volume 18
Issue 4

 Record created 2017-04-01, last modified 2018-01-23

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