Do Farmers Consider the Effects on Financial Flexibility when Making their Investment Decisions?

Friederike Anastassiadis, Oliver Mußhoff

Published: 01.12.2014  〉 Volume 63 (2014), Number 4, 240-258  〉 Resort: Articles 
Submitted: N. A.   〉 Feedback to authors after first review: N. A.   〉 Accepted: N. A.

ABSTRACT

for adaption processes which often involve leveraged investments that, in turn, cause decreasing equity capital ratios of farms. It is, therefore, possible that financial flexibility - as the farm’s debt capacity - will also decrease. The question arises to what extent decision makers consider the effects on the financial flexibility of the individual farm when making their investment decisions. In the present study, farmers are faced with hypothetical investment alternatives in a discrete choice experiment. The investment alternatives presented to the farmers differ in their profitability, risk and effect on the financial flexibility of the individual farm. The results show that financial flexibility is relevant in their investment decisions. The importance farmers attach to the financial flexibility depends, among others, on their risk attitude and the profitability of the farm.
CONTACT AUTHOR
M.SC. FRIEDERIKE ANASTASSIADIS
Georg-August-Universität Göttingen
Fakultät für Agrarwissenschaften,
Department für Agrarökonomie und Rurale Entwicklung,
Arbeitsbereich Landwirtschaftliche Betriebslehre
Platz der Göttinger Sieben 5, 37073 Göttingen
E-Mail: friederike.anastassiadis@agr.uni-goettingen.de
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