VOLUME XV
AUTUMN 2007

ACOUNTING INFORMATION IN ANALYSING AND PREDICTING FARM VIABILITY
 
JOSEP M.ª ARGILÉS BOSCH
Universitat de Barcelona
 
Spanish and Western agriculture show a continuous decrease in the number of farms. One of the main factors for this trend is the economic nonviability of many of the existing farms. In addition, the 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 the understanding and prediction of various degrees of farm viability. Two ordinal logit models were applied to a sample of farms in 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 for predicting various degrees of farm viability. This finding reveals the need to encourage the little existing use of accounting by farms and to develop appropriate accounting standards for agriculture.
 
Key words: accounting, agriculture, farm, non-viability, failure prediction models.
JEL classification: M20, M40, Q14.

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