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Abstract(s)
Over the last decade Portuguese Agricultural Credit Cooperatives (ACCs) have increasingly face
survival challenges related to their difficulty in gathering equity. The main source of ACCs equity is the
net benefit; thus, understanding how ACCs governance can work on correcting bad economic
performance is of crucial importance to overcome this constraint. The main objective of this paper is to
describe the governance control mechanisms in the ACCs. Five governance mechanisms are identified:
board and chairman change (internal mechanisms), central ACC intervention by an agent or by
management board replacement and merger. Empirical analysis proved that the internal governance
mechanisms activity is not related to the ACC performance. Additionally: (a) ACCs with a central ACC
agent and merged ACCs hold a weaker credit management and a heavy administrative costs structure and
profitability problems; and (b) ACCs with a management board replacement by the central ACC hold a
weaker credit management and present solvency problems.
Description
Keywords
Credit cooperatives Governance Multinomial logit
Citation
Cabo, Paula; Rebelo, João (2005). Governance control mechanisms in Portuguese agricultural credit cooperatives. In 99th Seminar of the European Association of Agricultural Economists. Copenhagen. p. 1-14