Current Agriculture, Food & Resource Issues
G. Hailu, E. W. Goddard and S. R. Jeffrey
Information on social-psychological variables (BI, A, SN, PBC) are obtained using
the TpB model. Measures for attitude, SN and PBC are given in tables 1, 2 and 3,
respectively.
Intention is a measure of the extent to which an individual is motivated to approve
additional borrowing. Two items, each based on a 7-point Likert scale are used to measure
behavioural intention. These include the following statements: (1) During the next two
years I will approve additional borrowing to finance investment in the company; (very
unlikely - very likely) and (2) Ifyou were told that a higher level of debt leads to higher
returns to equity because of tax benefits, how would it affect your intention to finance
proposed expansion using 100% long-term debt? (would not borrow - would borrow).
Based on this information, the attitudinal index is derived for each individual as in
table 1. Each respondent is asked to respond to a series of statements, such as, Increasing
expected returns to members’ equity is ..., using a 7-point Likert scale response from
“very bad” to “very good”. The individual’s responses are indexed from -3 to +3 and used
as the outcome evaluation measure. The respondent is then asked to respond to another
series of statements, such as, If I approve 100% long-term debt financing of expansions it
will increase returns to members’ equity, again using a 7-point Likert scale response from
“very unlikely” to “very likely”. The individual’s responses are indexed numerically from
1 to 7 and used as the belief strength measure. The products of outcome evaluation and
belief strength are summed over all of the statements to obtain an overall attitudinal index.
Table 1 provides a summary of the statements from the survey and numerically indexed
responses for a sample respondent, to illustrate the method used. In this case, the overall
attitude index value is 13. This person’s attitude toward increasing borrowing is, then,
predicted to be positive.
To measure subjective norm, individuals are asked to respond to a series of
statements, such as, My colleagues think that I should approve long-term borrowing for
Table 1 Decision Makers’ Beliefs about Long-term Debt Financing of
Business Expansions (Sample Respondent)
|
Belief |
Outcome |
Belief |
Product |
|
1. Increasing expected returns to shareholder/member | |||
|
equity |
1 |
5 |
5 |
|
2. Overcoming capital constraint problems |
3 |
5 |
15 |
|
3. Benefiting from the tax deductibility of interest charge |
-2 |
4 |
-8 |
|
4. Increasing likelihood of bankruptcy |
1 |
6 |
6 |
|
5. Increasing profit |
-1 |
1 |
-1 |
|
6. Increasing financial risk exposure |
-1 |
2 |
-2 |
|
7. Reducing future flexibility |
-1 |
2 |
-2 |
|
8. Making a safe investment |
0 |
6 |
0 |
|
Sum |
13 |
69