EFFECTS OF MANAGERS' POWER ON CAPITAL STRUCTURE: A STUDY OF ITALIAN AGRICULTURAL COOPERATIVES

Authors:
Russo, Carlo
Weatherspoon, Dave D.
Peterson, H. Christopher
Sabbatini, Massimo
Type: Journal Article
Year of publication: 2000
Source: AgEcon
Collected from: AGRIS
Subject:
cooperatives
agribusiness and cooperatives
Description:Excessive leverage is one of the most important problems facing Italian agricultural cooperatives as the competition in the EU intensifies. An empirical study of 500 agricultural cooperatives supports the hypothesis that cooperatives characterized as having "powerful managers" have a capital structure that is significantly different from the "nonpowerful manager" cooperatives. Powerful manager cooperatives were less leveraged and had a long term strategy that focused on minimizing financial risk by increasing their equity/asset ratio. The result of this strategy is an increased probability of long term international competitiveness.
 

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