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Abstract
This research examines the effect of risk on the proportion of equity held by
agricultural cooperatives. The measured components of risk are business risk and
the financial risk that is dependent on the proportion of debt in the cooperative's
capital structure. The empirical results indicate the proportion of equity is inversely
related to financial risk and positively related to business risk. These risk effects
are estimated to differ based on the commodity handled by the cooperative. No
Significant relation between the proportion of equity and whether or not the cooperative
operates on a pooling basis is estimated.