Determinants of the Strength of Strategic Adjustments in Farm Capital Structure

This study employs correlation relationships to measure the strength of trade-offs between business and financial risks as a representative of the strategic capital adjustment process. Under different business risk measures based on varying lengths of historical farm income data, results suggest that farmers tend to adopt a myopic perspective when contemplating risk-balancing plans. Cross-sectional regression results for two-time period models covering the decade of the 1980s and 1990s yielded important implications. The liquidity-constrained environment of the 1980s emphasizes the combination of risk-balancing plans, specialization, and market revenue-enhancing strategies. In the 1990s, risk balancing becomes compatible with risk-reducing crop diversification and insurance protection plans.

Issue Date:
Publication Type:
Journal Article
DOI and Other Identifiers:
Record Identifier:
PURL Identifier:
Published in:
Journal of Agricultural and Applied Economics, 35, 1
Page range:
Total Pages:
JEL Codes:
D21; D81; G11; Q12; Q14

 Record created 2017-04-01, last modified 2020-10-28

Download fulltext

Rate this document:

Rate this document:
(Not yet reviewed)