Accounting information and the prediction of farm non-viability

Abstract

Farms make little use of accounting and until now have been largely excluded from the scope of accounting standards. However, the hypothesis of this paper is that the use of accounting-based information could significantly improve understanding and prediction of farm non-viability. Two dichotomous logit models were applied to a sample containing viable and non-viable farms of Catalonia, Spain. One model included non-accounting-based variables, while the other also considered accounting-based variables. It was found that accounting-based variables added significant information to predict farm non-viability.