Debt Financing and Efficiency in Agricultural Firms
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In this work the effects of large- and short-term debts on efficiency are
tested on a set of agricultural firms. Accounting data of crop, livestock, mixed and service
firms are used. First, the efficiencies of the farms are obtained by using nonparametric
methods (input-oriented DEA). Then, in a second stage, censored regressions are run
with different kinds of explicative variables, including financial ratios. The results show
a significative and positive relationship between short-term indebtedness and efficiency,
which would be agree with some theories positing that firms with higher short-run
obligations make additional efforts to satisfy their payments, and this leads to an
improvement of efficiency.