Manager Power, Member Behavior and Capital Structure: Portuguese Douro Wine Cooperatives

Leverage is one of the most important financial factors to the survival and viability of agricultural cooperatives (e.g., wine cooperatives) during a period of intense competition. Leverage is influenced both by the behavior of managers and cooperative members. An empirical study for the Douro Demarcated Region Wine Cooperatives (DDRWC) supports the hypothesis that managers have a positive influence in the determination of the equity/total assets ratio and that individualistic behavior of cooperative members has a negative influence in the value of this ratio. This paper suggests that there may be value in reconsidering cooperatives in the context of a so-called Mediterranean model.