Accounting for Biological Assets and the Cost of Debt

Daly, Abbie; Skaife, Hollis Ashbaugh

doi:10.2308/jiar-51335

Cited by 15 publications

(53 citation statements)

References 25 publications

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“…Measuring the value of biological assets in the context of third party capital cost was an issue studied by Daly and Skaife (2016). They state that ' .…”

Section: Understanding the Cost Of Capitalmentioning

confidence: 99%

Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

2018

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This paper proposes a methodology for calculating the cost of equity for unlisted agricultural companies in Poland. An analysis of a fixed effects panel model was conducted on a sample of 79 agricultural enterprises from the Farm Accountancy Data Network (FADN) field of observation in 2012-2015. The empirical model includes a value of land, agricultural area, depreciation, sale earnings, and payables. The study confirmed that in the valuation of the cost of equity capital in agricultural enterprises, factors that are specific to this sector must be taken into account. As the basic source of production is agricultural land, it must be taken into consideration while estimating the cost of equity capital. This factor was included in the theoretical model.

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“…Measuring the value of biological assets in the context of third party capital cost was an issue studied by Daly and Skaife (2016). They state that ' .…”

Section: Understanding the Cost Of Capitalmentioning

confidence: 99%

Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

2018

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“…The interest rates of the firms were not directly reported in the financial statements collected in this study. Thus, the cost of debt was estimated based on the studies of Pittman and Fortin (2004), Minnis (2011) and Daly and Skaife (2016), in which it was obtained by dividing the reported interest expenditures by the average of short-and long-term debt [(short-term debt + long-term debt) / 2].…”

Section: Variable Description ■ Dependent Variablementioning

confidence: 99%

“…Moreover, the cost of debt paid by firms is not directly observable. As a result, the cost of debt was estimated based on the studies of Pittman and Fortin (2004), Minnis (2011) and Daly and Skaife (2016), in which the estimate was obtained by dividing the interest expenditures reported by the average of short-and longterm debt. However, despite its wide use in the literature, this measure is a noisy proxy for the interest rate in private companies, and Cassar (2011) identifies several limitations of this proxy, such as the fact that it considers the average level of debt instead of the loan characteristics and does not identify which liabilities are at arms' length.…”

Section: Robustness Testsmentioning

confidence: 99%

“…In the case of this research, different from previous studies, the efforts are concentrated within the Brazilian sugarcane industry. The specific characteristics of this industry, such as the importance of the biological assets in the agricultural activity, reflect the relevance of the study since they increase the need for working capital funding (Daly and Skaife, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Audit quality and the cost of debt in private firms: evidence from the Brazilian sugarcane industry

Manoel

Moraes

Santos

et al. 2022

IFAM

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Evidence is mixed regarding the economic benefits achieved by companies hiring large firms to audit their financial statements. The studies approaching this theme concentrate mostly on public companies in developed markets, while the effect on private firms in emerging markets is still an open question. This research explores this gap by analyzing whether private firms in the Brazilian sugarcane industry audited by a Big 4 have a lower cost of debt than those audited by a non-Big 4. For that, a unique, hand-collected, dataset was used. This paper contributes to the literature by providing evidence of the role of audit institutions in an environment lacking studies on private firms’ financial reports, especially in emerging economies. The empirical analysis does not indicate that the cost of debt is negatively influenced by the verification of financial statements by a high-quality auditor. Banks and credit unions, as the primary funding sources of the industry, condition the cost of debt reduction to the levels of tangibility, leverage, and profitability. We also contribute to the literature by demonstrating that lenders may have other soft information sources, obtained through banking relationship, which may substitute higher-quality auditor. The results hold after robustness checks and endogeneity concerns.

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“…of the Previous Research and Publications. Issues of evaluation of biological assets and agricultural products have attracted a large number of foreign scholars in recent years (among them there are scientists from Italy (R.Cavaliero [1], Romania (D.Mates, V.Grosu [2]), England (A.Further[3] …”

mentioning

confidence: 99%

The Influence of Assessment of Biological Assets and Agricultural Production on Taxation of Agricultural Enterprises

Kozachenko

Chudak

Yaremchuk

2019

EFM

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Agriculture is one of the main branches of the national economy of Ukraine. Accordingly, the logic of accounting rules, connected with the objects of this branch, must be based on the national interests. However, this statement is not always performed. Today, between the national and international accounting rules of biological assets and agricultural products, as the main objects of accounting in agriculture. there is a certain dissonance. It concerns the order of their assessment and affects the taxation of agricultural enterprises. The aim of the article is to highlight those consequences which the valuation of biological assets and agricultural products has for the agrarian enterprises, with its influence on their tax load and the financial situation in general. During the process of researching, a chain of considerations about the tax aspect of the motivation of propaganda of the valuation of the biological assets and agricultural products of agricultural enterprises is presented. It is proved that such an assessment procedure is not profitable for local agricultural producers, because it creates additional financial burdens for them. This reduces their competitiveness and creates benefits for big business. On the basis of the negative impact of the estimation of objects of the alive economy at fair value on the financial condition of agrarian enterprises when they are in the system of taxation of income tax, a vision is expressed regarding the refusal of international rules of accounting of biological assets and agricultural products.

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Accounting for Biological Assets and the Cost of Debt

Cited by 15 publications

References 25 publications

Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland

Audit quality and the cost of debt in private firms: evidence from the Brazilian sugarcane industry

The Influence of Assessment of Biological Assets and Agricultural Production on Taxation of Agricultural Enterprises

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