| This thesis analyzes how the optimal capital structure is affected by capital management and major sources of risk under the rule of maximizing the value of discounted cash flows to members. The analysis is done by using the present value of cash flow method. This research employs the panel procedure in Statistical Analysis System (SAS) to solve the firm value optimization problem. The data set includes financial reports from farm supply and grain marketing cooperatives in North Dakota. Empirical Results indicate that the optimal debt ratio is related to the lagged debt ratio, the proportion of assets held as liquid assets, the marginal profit of capital, the marginal adjustment cost of investments, the expected marginal adjustment cost of investments, macroeconomic risks, and the annual fraction of equity retired by the cooperative. All these factors impact members' investments to the cooperative and the cooperative's debt financing. |
