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Cross and Buccola (2004) established that if the lenders of cooperatives are not in position to assess the “right” price to be paid for the raw-material delivered by cooperative members, these latter may push for a cash transfer which may deteriorate the financial position of the cooperative. This form of liquidation can be an exit way for cooperatives which, at the turning point of maturity, do not seek strategic alliances to increase their market power, or do not shift to a new model, according to the lifecycle approach of Cook (1995). In this research, we test this hypothesis for cooperatives of the Bordeaux wine industry. We run two regression which aim at characterizing the relationship between leverage and cash transfer to cooperative members according to the downstream strategy of cooperatives. Our results confirm our main hypothesis. The cooperatives which stay in the traditional form are prone to liquidation: the cash transfer to producers implies a higher leverage which implies a financial distress. The financial behavior of cooperatives forming union and of those which have opted for vertical integration is radically different.

Keywords: cooperative finance ; liquidation ; lifecycle approach ; wine industry ; cooperative union ; vertical integration

Subject(s): Agribusiness

Financial Economics

Industrial Organization

Issue Date: May 27 2015

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/205743

Total Pages: 12

JEL Codes: G320; D230; Q130

Series Statement: Paper#7629

Record appears in: Agricultural and Applied Economics Association (AAEA) > 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California





Autor: Cadot, Julien ; Alonso Ugaglia, Adeline

Fuente: http://ageconsearch.umn.edu/record/205743?ln=en







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