Assessing Cash Holdings in Agribusiness

Carlos Trejo-Pech, Michael Gunderson (), Timothy Baker (), Allan Gray () and Michael D. Boehlje

International Food and Agribusiness Management Review, 2015, vol. 18, issue 4, 20

Abstract: 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.

Keywords: Agribusiness; Agricultural Finance; Demand and Price Analysis; Financial Economics; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://ageconsearch.umn.edu/record/211655/files/520140098.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ifaamr:211655

DOI: 10.22004/ag.econ.211655

Access Statistics for this article

More articles in International Food and Agribusiness Management Review from International Food and Agribusiness Management Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().