Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-26T16:33:25.336Z Has data issue: false hasContentIssue false
  • English
  • Français

Agency Theory Issues in the Food Processing Industry

Published online by Cambridge University Press:  26 January 2015

Michael A. Boland ,
Bill B. Golden  and
Leah J. Tsoodle
Michael A. Boland
Affiliation:
Kansas State University
Bill B. Golden
Affiliation:
Kansas State University and Texas
Leah J. Tsoodle
Affiliation:
Department of Agricultural Economics at Kansas State University
Get access Rights & Permissions [Opens in a new window]

Abstract

The objective is to identify significant determinants of performance for food processing firms over the 1992 to 2003 time period, focusing particularly on the issue of family control. Variables measuring firm effects such as asset size, governance, income distribution, and risk are used to explain return on equity. This study builds upon previous research by including a measure of income distribution in the food processing industry. Governance variables are found to be significant determinants of return on equity. The results found no evidence of agency problems in family-controlled firms during this time period.

Keywords

agribusinessinstitutional economicsorganizational economicsD23G34Q13Q14
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 40 , Issue 2 , August 2008 , pp. 623 - 634
Copyright
Copyright © Southern Agricultural Economics Association 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Allen, D.W., and Lueck, D.. “Risk Preferences and the Economics of Contracts.” American Economic Review 85,2(1995):447–58.Google Scholar
Anderson, R., Mansi, S., and Reeb, D.. “Founding Family Ownership and the Agency Cost of Debt.” Journal of Financial Economics 68(2003):263–85.CrossRefGoogle Scholar
Anderson, R.C. “Board Composition: Balancing Family Influence in S&P 500 Firms.” Administrative Sciences Quarterly 49(2004):209–37.CrossRefGoogle Scholar
Anderson, R.C., and Reeb, D.M.. “Founding-Family Ownership and Firm Performance Evidence from the S&P500.” Journal of Finance 58(June 2003):1301–1328.CrossRefGoogle Scholar
Ang, J., Cole, R., and Lin, J.. “Agency Costs and Ownership Structure.” Journal of Finance 55(2000):81–106.CrossRefGoogle Scholar
Baarda, J.R. “Current Issues in Cooperative Finance and Governance.” Working Paper, U.S. Department of Agriculture Rural Development, Cooperative Programs, April 2006.Google Scholar
Boland, M.A. “Governance and Outside Equity Issues Facing Cooperatives.” Paper presented at U.S. Department of Agriculture Economic Research Service Workshop, Agricultural and Food Cooperatives in Rural Development: Implications of Business Dynamics for the Public Policy. Washington DC, June 16-17, 2004.Google Scholar
Boyd, S., Boland, M.A., Dhuyvetter, K., and Barton, D.. “The Persistence of Profitability in Local Farm Supply and Grain Marketing Cooperatives.” Journal of Agricultural and Applied Economics 59,1(2007):201–10.CrossRefGoogle Scholar
Brav, A., Graham, J.R., Harvey, C.R., and Michaely, R.. “Payout Policy in the 21st Century.” Journal of Financial Economics 77,3(September 2004):483–527.CrossRefGoogle Scholar
Burkhart, M., Panunzi, F., and Shleifer, A.. “Family Firms.” Journal of Finance 58,5(October 2003):2167–2201.CrossRefGoogle Scholar
Business Week. “Family, Inc. Surprise! One-Third of the S&P 500 Companies Have Founding Family Involved in Management. And Those are usually the Best Performers.” Business Week. November 10, 2003.Google Scholar
Casson, M. “The Economics of the Family Firm.” Scandinavian Economics History Review 47 (1999):10–23.CrossRefGoogle Scholar
Chaddad, F.R., and Cook, M.L.. “Understanding New Cooperative Models: An Ownership-Control Rights Typography.” Review of Agricultural Economics 26,3(Fall 2004):348–60.CrossRefGoogle Scholar
Cheung, S. “The Fable of the Bees: An Economic Investigation.” Journal of Law and Economics 16,1(1973):11–33.Google Scholar
Cook, M.L., and Barry, P.. “Organizational Economics in the Food, Agribusiness, and Agricultural Sectors.” American Journal of Agricultural Economics 86,3(August 2004):740–43.CrossRefGoogle Scholar
Demsetz, H. “The Structure of Ownership and the Theory of the Firm.” Journal of Law and Economics 25(1983):375–90.CrossRefGoogle Scholar
Demsetz, H., and Lehn, K.. “The Structure of Corporate Ownership: Causes and Consequences.” Journal of Political Economy 93(1985):1155–1177.CrossRefGoogle Scholar
Dorsey, S., and Boland, M.A.. “The Economic Impact of Integration and Diversification in the Food Economy.” Working paper, Dept. of Agri. Econ., Kansas State University, 2008.Google Scholar
Faccio, M., Lang, L.P.H., and Young, L.. “Dividends and Expropriation.” American Economic Review 91(2001):54–78.CrossRefGoogle Scholar
Fama, E., and French, K.. “Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?” Journal of Financial Economics 60(2001):3–43.CrossRefGoogle Scholar
Fama, E., and Jensen, M.. “Separation of Ownership and Control.” Journal of Law and Economics 26(1983):301–25.CrossRefGoogle Scholar
Greene, W.K. Econometric Analysis, 2nd ed. New York: Prentice-Hall, 1993.Google Scholar
Himmelberg, C., Hubbard, R.G., and Palia, D.. “Understanding the Determinants of Managerial Ownership.” Journal of Financial Economics 53(1999):353–84.CrossRefGoogle Scholar
James, H. “Owner as a Manager, Extended Horizons, and the Family Firm.” International Journal of the Economics of Businesses 6(1999):41–56.CrossRefGoogle Scholar
James, H.S., Klein, P.G., and Sykuta, M.E.. “Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form.” Contracting and Organizations Research Institute Working Paper, University of Missouri, 2007.Google Scholar
Jensen, M.C., and Meckling, W.H.. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics 3(1976):305–60.CrossRefGoogle Scholar
Johnson, S., Porta, R. La, Lopez-de-Silanes, F., and Shleifer, A.. “Tunneling.” American Economic Review 90(2000):20–27.CrossRefGoogle Scholar
Knoeber, C. “A Real Game of Chicken: Contracts, Tournaments, and the Production of Broilers.” Journal of Law, Economics and Organization 5(1989):271–92.Google Scholar
Martinez, S.W. Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products. Washington, DC: U.S. Department of Agriculture Economic Research Service, Rep. No. 777, 1999.Google Scholar
Mayer, C. “Financial Systems, Corporate Finance, and Economic Development.” Asymmetric Information, Corporate Finance and Investment. Hubbard, R.G., ed. Chicago: The University of Chicago Press, 1990.Google Scholar
McGahan, A. “The Performance of US Corporations:1981-1994.” Journal of Industrial Economics 47(1999):373–98.CrossRefGoogle Scholar
Menard, C. “On Clusters, Hybrids, and other Strange Forms: The Case of the French Poultry Industry.” Journal of Institutional and Theoretical Economics 152(1996):154–82.Google Scholar
Monsen, R.J., Chiu, J.S., and Cooley, D.E.. “The Effect of Separation of Ownership and Control on the Performance of the Large Firm.” Quarterly Journal of Economics 82(1975):81–92.Google Scholar
Pagano, M., and Roell, A.. “The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public.” Quarterly Journal of Economics 113(1998):187–225.CrossRefGoogle Scholar
Ruefli, T., Collins, J.M., and Lacugna, J.R.. “Risk Measures in Strategic Management Research: Auld Lang Syne?” Strategic Management Journal 20(1999):167–94.3.0.CO;2-Q>CrossRefGoogle Scholar
Schulze, W.S., Lubatkin, M.H., and Dino, R.N.. “Exploring the Agency Consequences of Ownership Dispersion Among the Directors of Private Family Firms.” Academy of Management Journal 46,2(2003):179–94.CrossRefGoogle Scholar
Schumacher, S., and Boland, M.A.. “The Persistence of Profitability among Firms in the Food Economy.” American Journal of Agricultural Economics 87(February 2005):103–15.CrossRefGoogle Scholar
Shleifer, A., and Vishny, R.. “Large Shareholders and Corporate Control.” Journal of Political Economy 94(1986):461–89.CrossRefGoogle Scholar
Stein, J. “Takeover Threats and Managerial Myopia.” Journal of Political Economy 96(1988):61–80.CrossRefGoogle Scholar
Ware, R.F. “Performance of Manager-Versus Owner-Controlled Firms in the Food and Beverage Industry.” Quarterly Review of Economics and Business 15(1975):81–92.Google Scholar