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The Source of Productivity Growth in Dutch Agriculture: A Perspective from Finance
Author(s) -
Zhengfei Guan,
Lansink Alfons Oude
Publication year - 2006
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2006.00885.x
Subject(s) - capital structure , return on equity , productivity , profitability index , debt to equity ratio , economics , agriculture , return on capital , business , index (typography) , proxy (statistics) , profit (economics) , debt , agricultural economics , finance , financial capital , capital formation , macroeconomics , microeconomics , computer science , ecology , population , demography , machine learning , sociology , biology , world wide web , nonprobability sampling
In corporate finance, the impact of capital structure on firm performance has been widely studied. This article extends the capital structure study to the situation in agriculture, explicitly addressing the difference between family farms and corporate firms. We use the Malmquist productivity growth index as a proxy for performance to study the impact of capital structure (debt) on farm performance. We compare the results with those from the traditional performance model that uses profitability (e.g., return on equity (ROE)) as performance measure. Using data from Dutch arable farms, results show that debt has no effect on ROE, whereas it has a positive effect on productivity growth.