Do Decision Makers' Debt-risk Attitudes Affect the Agency Costs of Debt?



Current Agriculture, Food & Resource Issues

G. Hailu, E. W. Goddard and S. R. Jeffrey

summed across the r salient control beliefs to produce the perception of behavioural
control (
PBC); that is,
r

(3)    PBC = ɪCBkPFk.

k=1

Overall, the motivational factors that influence behaviour are assumed to be captured
by intention to perform a given behaviour. Intentions are the indications of how much of
an effort the DMs are planning to exert in order to perform the behaviour. Behavioural
intention represents the person’s motivation to perform the behaviour in question.

The above theoretical constructs are latent variables in that they cannot be directly
observed but must be inferred from observable responses. The theory of planned
behaviour can be used to organize the key concepts of behaviour and to predict behaviour.
In this case, the behaviour in question is debt financing. Once the information on attitude
toward risk or debt capital, subjective norm and perceived behavioural control is obtained,
the next step is to investigate which of the three is the best predictor of intention to
increase/decrease debt capital; that is,
BI=w1A+w2SN + w3PBC , where the w’s are
parameters to be estimated.

In the empirical literature, the TpB has been modified to include individuals’ previous
habits or behaviours and socio-demographic variables. For example, using the Fishbein
and Ajzen approach, Bentler and Speckart (1979) modeled attitudes, subjective norms,
intentions and past behaviour and subsequent behaviour. The behavioural model is also
versatile in accommodating socio-demographic variables. Identification of differences in
attitudes attributable to a DM’s gender, age, manager or director status, income, education
and awareness of risk management practices is an important outcome of the study.

Data and Methods

A questionnaire was constructed according to the TpB. Survey questionnaires were sent to
139 managers and directors of co-operative agribusiness firms. Of these, 30 completed
questionnaires were returned, for a response rate of 22 percent. The respondents included
2 females and 28 males; 14 were managers while the other 16 were directors.
Approximately 67 percent of the respondents had more than high school education; 30
percent were above the age of 54 years; 50 percent had before-tax household income in
2003 of at least C$100,000. More than 80 percent of the respondents were from
agribusiness supply co-operatives, while the rest of the respondents were from feed mills
and fruit and flower co-operatives. Besides the responses considered in the current
analysis, company background, awareness of different risk management strategies,
frequency of previous gambling activities and perceptions of importance and effectiveness
of risk management strategies were also elicited.3

68



More intriguing information

1. Optimal Rent Extraction in Pre-Industrial England and France – Default Risk and Monitoring Costs
2. The InnoRegio-program: a new way to promote regional innovation networks - empirical results of the complementary research -
3. ADJUSTMENT TO GLOBALISATION: A STUDY OF THE FOOTWEAR INDUSTRY IN EUROPE
4. The name is absent
5. Foreign direct investment in the Indian telecommunications sector
6. Ein pragmatisierter Kalkul des naturlichen Schlieβens nebst Metatheorie
7. Group cooperation, inclusion and disaffected pupils: some responses to informal learning in the music classroom
8. Errors in recorded security prices and the turn-of-the year effect
9. Tissue Tracking Imaging for Identifying the Origin of Idiopathic Ventricular Arrhythmias: A New Role of Cardiac Ultrasound in Electrophysiology
10. Macroeconomic Interdependence in a Two-Country DSGE Model under Diverging Interest-Rate Rules
11. An Investigation of transience upon mothers of primary-aged children and their school
12. IMMIGRATION AND AGRICULTURAL LABOR POLICIES
13. Workforce or Workfare?
14. Large-N and Large-T Properties of Panel Data Estimators and the Hausman Test
15. The name is absent
16. Une Classe de Concepts
17. The name is absent
18. Campanile Orchestra
19. Work Rich, Time Poor? Time-Use of Women and Men in Ireland
20. The name is absent