Is the Ownership Structure Model a Decisive Determinant of Co-Operatives' Financial Success? A Financial Assessment

In this paper, the financial/ownership structures of agribusiness co-operatives (co-ops) are analyzed in order to examine whether new co-op models perform better than the more traditional ones. The assessment procedure introduces a new financial decision-aid approach, which is based on data-analysis techniques in combination with a Preference Ranking Organization Method of Enrichment Evaluations (PROMETHEE II). The application of this multi-criteria decision-aid approach allows the rank ordering of the co-ops on the basis of the most prominent financial ratios. The financial ratios were selected using principal component analysis. This analytical procedure reduces the dimensionality of large numbers of interrelated financial performance measures. We assess the financial success of selected EU agribusiness co-ops for the period 1999-2007. Results show that there is no clear-cut evidence that co-op models used to attract outside equity perform better than the more traditional models. This suggests that ownership structure of co-ops is not a decisive factor for their financial success.