Accounting Information and the Prediction of Farm Viability
Economics working paper 277
42 Pages Posted: 16 Apr 1998
Until recently farm management made little use of accounting and agriculture has been largely excluded from the scope of accounting standards. This article examines the current use of accounting in agriculture and points the need to establish accounting standards for agriculture. Empirical evidence shows that accounting can make a significant contribution to agricultural management and farm viability and could also be important for other agents involved in agricultural decision making. Existing literature on failure prediction models and farm viability prediction studies provide the starting point for our research, in which two dichotomous logit models were applied to subsamples of viable and unviable farms in Catalonia, Spain. The first model considered only non-financial variables, while the other also considered financial ones. When accounting variables were added to the model, a significant reduction in deviance was observed.
JEL Classification: M40, L70
Suggested Citation: Suggested Citation