The Importance of Accounting Information for Predicting Various Degrees of Farm Viability

UPF Economics and Business Working Paper No. 612

Posted: 28 Jun 2002

Date Written: March 2002

Abstract

Spanish and Western agriculture show a continuous decrease in the number of farms. One of the main factors for this trend is the economic non-viability of many of the existing farms. In addition, interrelationship of agriculture with other industries is growing. Thus, policymakers, banks, creditors and other stakeholders are interested in predicting farm viability. The aim of this paper is to provide empirical evidence that the use of accounting-based information could significantly improve understanding and prediction of various degrees of farm viability. Two multinomial logit models were applied to a sample of farms of Catalonia, Spain. One model included non-accounting-based variables, while the other also considered accounting-based variables. It was found that accounting added significant information to predict various degrees of farm viability. This finding reveals, both the need of encouraging the little existing use of accounting by farms and to develop appropriate accounting standards for agriculture.

Keywords: accounting, agriculture, farm, non-viability, failure prediction models

JEL Classification: M41, G33, L70

Suggested Citation

Argilés Bosch, Josep Maria, The Importance of Accounting Information for Predicting Various Degrees of Farm Viability (March 2002). UPF Economics and Business Working Paper No. 612, Available at SSRN: https://ssrn.com/abstract=313600

Josep Maria Argilés Bosch (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34-93 542 24 05 (Phone)
+34-93 542 17 46 (Fax)

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