Financial structure and business achievement in agricultural cooperatives: an empirical approach

This paper analyzes the economic and financial information of a sample of Spanish agricultural co-operatives in order to identify the variables that determine the nature and composition of its financial structure. A new variable named "business achievement" has been defined using the statistical technique of principal component analysis (PCA); this, and other ratios, have been used in the regression models. Results show no relationship between financial structure and "business achievement", but they support the Pecking order theory, thus validating the hypothesis that, in absence of self-financing, the prevalent funding sources in agricultural cooperatives are debt and capitalization. Also, in line with the Agency theory, it has been shown that in these entities growths in sales, and therefore cash flow generation, lead to higher short-term debt, while the use of long-term debt decreases.