1
Antonio Mínguez-Vera
University of Murcia
Murcia /Spain
E-Mail: minver@um.es
Juan Francisco Martín-Ugedo
University of Murcia
Murcia /Spain
E-Mail: juanfran@um.es
Narciso Arcas-Lario
Polytechnic University of Cartagena
Cartagena /Spain
E-Mail: aracas.lario@upct.es
Abstract
This manuscript examines the member-agricultural cooperative relationship from the point of view of the Agency and of the Property Rights theories. The sample analysed includes 277 personal surveys to members of agricultural cooperatives at the Region of Murcia (Spain). The results show that members highly value all the objectives proposed and they also have a high level of satisfaction with the relationship. For both objectives and satisfaction, the members of the Boards of Directors as well as cooperative members with a large percentage of their incomes depending on the agricultural activity present higher values (than non-board members and members with a small percentage of their incomes depending on the agricultural activity). We also find that property rights theory is a good framework to explain the incentive that members of the cooperative have to exercise the control but has not a significant influence on the propensity to invest.
Keywords : Agency Theory, Property Rights Theory, Agricultural Cooperative
One characteristic of the agricultural cooperatives is the peculiar relationship that they support with their members, because these are owners, users, controllers, and beneficiaries, simultaneously. This complexity allows examining this relationship from different points of view: The Neoclassical Theory, the Agency Theory, the Transaction Costs Theory, the
Property Rights Theory, the Resources and Capabilities Theory and the Relational Theory.
Concretely, both the Agency Theory (Jensen and Meckling, 1976) and of the Property
Rights Theory (Fulton, 1995) point out governance problems on these firms.
1
This work is a result of the 05708/PHCS/07 research project financed by Programa de Generación de
Conocimiento Cientifico de Excelencia de la Fundación Séneca, Agencia de Ciencia y Tecnología de la Región de
Murcia, in collaboration with the Confederación de Cooperativas Agrarias de España (CCAE) and Federación de
Cooperativas Agrarias de Murcia (FECOAM).

In cooperatives, agency problems may arise by objectives discrepancies between members and the manager, members and directors and/or manager and directors. However, two circumstances make conflicts more relevant in this type of firms. On the one hand, property rights are not properly defined, driving to low incentives to exert control and to low investment tendency (Vitaliano, 1983). On the other hand, the lack of dynamicity in the cooperative-managers labour market and the difficulty to substitute managers leads to more powerful managers (Nilsson, 2001).
Considering that the managers’ utility function depends on their power, their prestige, the probability of retaining their employment and their remuneration (Williamson, 1965), this study pursues two main objectives: a) to analyze if some characteristics of the governance of the cooperatives may reduce the conflicts (measured as the possibility of objectives discrepancy and level of satisfaction), and b) to study if property rights variables may influence the investors effort and the control capacity. Data has been obtained by personal surveys to agricultural cooperative members in the Region of Murcia.
The rest of the manuscript is structured as follows. Section 2 provides an overview of the theory. Section 3 describes the sample, the data and the methodology employed as well as the hypothesis to be examined. Section 4 contains the empirical results. Finally, conclusions are presented in section 5.
Agency Theory
Agency Theory is an appropriate framework to examine the relationships that take place inside any firm and, therefore, in the agricultural cooperatives. The concept on which this theory is based is the “agency relationship”. This relationship is defined “as a contract under which one or more persons (the principal/s) engage another person (the agent) to perform some service on their behalf which involves delegating some decision making authority to the agent” (Jensen and Meckling, 1976). If both parties of the relationship are utility maximizers, act rationally and form unbiased expectations of the impact of the agency relationships in their utility function; then agents will try to reach their objectives, not having reason to be coincident with those of the principal (Barnea et al., 1985).
This issue will provoke agency conflicts. However, agency problems will arise when, in addition to conflict of objectives between the principal and the agent, there is also informative asymmetry between them. If a conflict of objectives takes place, but the principal has perfect information on the agent’s performances, the loss of efficiency can be overcome, by the principal including in the contract the performances that the agent should carry out, as well as checking if the agent has followed his instructions, with the possibility of including penalties in case of breach of contract (Gallén, 1997).
The agency costs are the sum of (Jensen and Meckling, 1976):
1. Monitoring expenditures: The principal will limit the autonomy of the agent by installing controls, maintaining registrations, establishing budgetary limits, making direct supervision, using compensation systems to condition the agent’s incentives, etc.

2. Bonding costs: Agent can voluntarily accept including clauses in their contract restricting their decision discretionarity. These restrictions may cause additional costs. For example, costs associated to profitable investments that may be rejected, direct cost associated to the formalization of the contract, and so on.
3. Residual loss.
The International Co-operative Alliance defines a co-operative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise” (ICA, 2007). Of similar form, the Spanish Cooperative Law 27/1999 (July 16th,
1999), points out in their article 1.1 that “the Cooperative is a firm constituted by people that freely associate and voluntarily retire, in order to make managerial activities”. Following these definitions and other precepts of the Law it is deduced that both its capital and the number of members are variables along the firm life.
Relative to the organization of the cooperatives, there is on one hand the General Assembly that is the meeting of the members constituted in order to deliberate and to adopt the agreements on those matters that, legal or statutorily, are their competence, being the decisions adopted a compulsory link to the members. The General Assembly is the equivalent to the Shareholders’ Meeting in the Inc. Corporations. However, there is a fundamental difference among them and it is that in the Inc. Corporations being a shareholder depends on the contribution to the firm’ capital, while in the Cooperatives the important thing is not the capital contributed but the person.
On the other hand there is the Board of Directors. It corresponds to this organ the top administration, the supervision of the managers and the representation of the cooperative.
Dow and Putterman (2000) point out that the only difference among these two organization types is that in Cooperatives directors are chosen by the members, while in capital based firms the members of the Board of Directors are chosen by the shareholders.
As Surroca et al. (2006) point out, there are two main reasons why little attention has been devoted to cooperatives in the corporate governance literature. On one hand, most research assumes that in the cooperatives there is no separation between ownership and control and, therefore, conflict does not exist (Hansmann, 1988). On the other hand, the research on corporate governance usually focuses on large firms, mainly quoted firms, where the agency problems are much more evident.
Focusing on the first of the previous points, in the studies on large firms it is usually assumed that the Board of Directors acts on behalf of interests of shareholders, having among other tasks the one of controlling the activity of the managers, given that when a atomized shareholders structure exists, the shareholders cannot exert the control by themselves. As we previously stood, it is usually assumed that in the cooperatives there is no separation between the management and the control. However, this hypothesis is far from being true, especially when the members’ number of the cooperative increases (Morales,
2004). Thus, this argument supporting one of the reasons why corporate governance literature has paid little attention to cooperatives seems to fail.

In quoted firms it is usually assumed that shareholders have a common objective: maximizing the firms’ market value. However, as pointed by Hansmann (1996), members in cooperatives may have very diverse objectives. Avoiding the costs derived of decision taking in a collective way is maybe the main reason why members usually delegate in managers the daily decisions.
Therefore, cooperatives face two problems. On one hand, in most of the cooperatives the administration is delegated to managers or professional agents. On the other hand, the multiplicity of objectives that member may have makes that the objectives of the firm are not well defined, thus managers’ discretionarity increases, making more probably that they adopt decisions that benefits themselves in detriment of decisions that benefit members. In addition, as pointed by Tirole (2001), the multiplicity of objectives makes much more difficult the establishment of incentives’ systems as well as control mechanisms that allow minimizing the conflicts between members and managers.
2.2
Property Rights Theory
The Property Rights Theory is an alternative to the Agency Theory. This Property Right
Theory focus in the assignment of property rights in order to solve problems that may arise because of incomplete contracts. According to many authors (Grossman and Hart, 1986;
Hart, 1988, 1995; Hart and Moore, 1990; Brynjolfsson, 1994), in the real world where transaction costs differ from zero and contracts are incomplete, the property is a key question in investing and control decisions.
Thus, in first place, the property of an asset implies a control on the residual flows that it generates. Therefore, the owner of the good is the one that has the incentive of giving it a better use, implying himself on the investment decisions. Following this theory the owner of the assets is the one that has to decide what to do with them when circumstances that were not included ex ante in a contract take place (Tarjizán, 2003). In this sense Cook and
Iliopoulos (1999) affirm that in the case where a person has not an undoubtedly possession of an asset, he will not have incentives to protect its value. In addition, in case that the property rights can not be transferred, the possibilities that the asset is finally owned by the person that is going to give it a better use and maximize its value are reduced.
In second place, Alchain and Demsetz (1972) justify the existence of the company on the basis of the conflicts that arise among the members of the team when there is not perfect information on the behaviour of the team members. This situation may provoke opportunist behaviour from individual persons leading to reduced return to the firm. The necessity of surveillance to avoid opportunists’ behaviours can be solved by giving the residual property rights to persons that are willing to exert to the team members.
The application of this theory to cooperatives is conditioned by the fact that property rights are not properly defined (Vitaliano, 1983). This circumstance, as in the case of the Agency
Theory, drives to three fundamental problems: a) the free-rider problem, b) the temporary horizon, and c) the risk (Vitiliano, 2003, Borgen, 2004).
The free-rider problem has two origins: External and internal. The first of them appears for the fact that property rights can not be transferred. Thus, members support themselves the costs associated to exert control, but benefits are received by all members simultaneously.

This fact can cause that members inhibit of their functions. Relative to the internal free-rider problem, it raises due to the fact that new members have the same rights that former members, causing an intergenerational conflict inside the cooperative (Vitaliano, 2003).
This may provoke reduced investing (Nilsson, 2001).
The problem of the temporary horizon makes reference to the little incentive that members have to make investments in the long-term. Such as Vitaliano (1983) and Porter and Scully
(1987) affirm, this conflict takes place when the member’s temporal horizon to demand of the residual rights is shorter than the life of the asset. The problem arises for the impossibility of the transmission of the residual rights and the non-existence of secondary market that provides liquidity. This may provoke underinvestment, more accused in research and intangible assets. This way, insiders of the cooperative will be under pressure to: a) increase the amount of cash available for the payments, and b) try to have investment projects with a very short pay-back even if the profitability is reduced.
The fact that property rights residual are not defined, the difficulty of transmission and the non-liquidity due to the lack of a secondary market, make the investors to consider their personal preferences for risk. Members can to press to the cooperative to carry out those investments with a smaller risk, although they suppose a smaller prospective profitability.
Vitaliano (1983) affirms that the restriction in the transmission and the residual rights of property prevents the owner of the cooperative to carry out a good diversification of risk.
Different authors have proposed a series of measures to solve the previously exposed problems. In the first place, to solve the conflict of the free-rider they make an appointment two mechanisms (Vitaliano (1983); Staatz, 1987; Porter and Scully (1987), Condom, 1990 and Cook and Iliopoulos (1999): a) to a policy of limitation of new members’ entrance combined with contracts between the members and the cooperative about the quality of the products to market, and b) the establishment of a secondary market of residual property rights, market that would price and take an active part in the transmission of the assets. This establishment of a secondary market, joint to the creation of structured plans of refunding in short term investment (Cook, 1995), are appropriated measures to solve the problem of the temporary horizon. Finally, the separation of the common capital allows the members to eliminate the problem of different risk aversion levels.
3.1
Sample and data
In Spain there are some 4,000 agricultural cooperatives that, in 2007, billed 17,000 million
€, supposing a very important part of the economic activity of the Spanish agricultural sector. A million members benefit of this economic activity all around Spain, providing employment to more than 100,000 people. 2,901 of those mentioned cooperatives are affiliated to the Confederación de Cooperativas Agrarias de España, CCAE (Confederation of Spanish Agricultural Cooperatives), 86 of them being seated in Murcia, 3.1% of the total
(CCAE, 2008).
The cooperative sector in Murcia was considered suitable in order to compare the models presented above. The significance of the cooperative sector in this region is of particular

note, given that plantations in Murcia are relatively small, averaging 3 ha, although 75% of the growers cultivate even smaller areas (CCAE, 2008).
In order to locate the cooperatives as well as their members we were helped by the
Federación de Cooperativas Agricolas de Murcia, FECOAM (Federation of Murcian
Agricultural Cooperatives). Due to the population’s characteristics (the fact that their member work and that they are older age) as well as the difficulty on obtaining information, personal surveys were used. To elaborate the questionnaire we previously carried out several interviews to key persons (cooperative members and directors). This allowed us to have a larger knowledge of the relationships to be analysed. Later, in order to elaborate the final version of the questionnaire, we made some pre-tests on previous versions of the questionnaire.
The high geographical dispersion introduced some difficulties in order to get in touch with cooperative members. So, we profited the celebration of the XIII Day of the Agricultural
Member that, organized by FECOAM, took place in April 10 2008 in Torre Pacheco
(Murcia). The presence of about 6,000 members and the procedure employed to select the sample (simple random sampling) guarantees its representativeness. 334 questionnaires were obtained. Given that some questionnaires were insufficiently answered or lacked relevant information, 57 of them were removed. Thus, the final sample was 277 questionnaires.
The questionnaire includes several questions relatives to objectives and the members’ satisfaction, the Agency Theory, the Property Rights Theory and member’s characteristics.
These questions as well as the name assigned to the variables are presented in the appendix.
Table 1 shows descriptive statistics. We can highlight that members provide a high value to each one of the objectives, with an average above 6.9/10 in all cases. Those objectives presenting higher values are not worrying on marketing and to assure the sale and the collection of the products. Not far from those values we find getting a better price sell price, to assure a better purchase price, the availability of services and the acquisition of useful knowledge for the development of their activity.
INSERT TABLE 1 ABOUT HERE
Focusing on the levels of satisfaction, we can also observe high values, being up to 7 in all cases.
Relative to the propensity to invest, we also find high values in all the proxies that we employ for this variable. We also observe that members of the cooperative do not have strong incentives to exert control and that the behaviour of the assembly is considered appropriate.
Relative to the characteristics of the members’ final sample, 11.7% are directors. There level of contribution to the total product is above the average. Relative to the type of participation they wish, a large majority prefer one member one vote. This preference is quite surprising given that most of the members on the final sample contribute above average. The average permanence in the cooperative is 18 years. They are inclined on accepting new members
(7.2/10), which shows that they are not aware of the free-rider problem or that they do not feel threatened by the possibility of new members. In addition, they believe it would be easy

to get their funds contribution back, even if this type of firm presents important restrictions for it in comparison with other type of companies.
Members also think that they do not assume a high risk when investing in the cooperative.
However, they would like that the cooperative diversificate the products offered in order to reduce risk. Therefore, it seems that, in general, members are highly risk averse. Also, a slight preference exists for the long term benefit (6.4 on 10). It also should be pointed that many member have the agricultural activity part time. Only 54% of the total of its revenues comes from the agricultural activity.
In sum, the results observed point to no major agency conflicts between members nor conflicts derived by the weakness in the definition of the property rights. Members seem to be willing to carry out an investing effort and they do not consider necessary to be implied in exerting control.
3.2
Methodology
First, we examine the influence that several characteristics may have on objectives (model
1). Then the effect that those characteristics may have on the level of satisfaction (model 2).
These characteristics may lead to a discretionary behaviour, provoking agency conflicts.
These models are analysed employing ordinary least squares (OLS). The first model is:
OBJECTIVE i
 
0
 i
4 

1
 i
INDVAR i
  i
(1) where OBJECTIVE considers, alternatively, two multi-items variables. One of them referring to marketing related variables and the other to non-marketing related variables (see appendix for more detail). INDVAR includes several independent variables relatives to members of the cooperative characteristics (number of years being member of the cooperative, whether the member of the cooperative is director or not, the level of their product to the cooperative and the percentage of member’s incomes coming from agricultural activity. Finally, εi represents the term of the estimate error.
In order to measure these concepts and, with the general consensus in mind that perceptions and attitudes cannot be measured directly (Lastovicka and Thamodaran, 1991), we use a multi-item classification scale by categories of ten points, widely accepted by investigators to assess concepts such as those that concern us here.
The second model is:

SATISFACTI ON i
 
0
 i
4 

1
 i
INDVAR i
  i
(2) where SATISFACTION refers to a multi-item variable considering different matters associated to members of the cooperative satisfaction (see appendix for more detail). The rest of variables are the same ones that in model 1.
Significant values for the coefficients would show divergence on the objectives and satisfaction levels depending on member’s characteristics.
Next, we examine the effect of some Property Rights Theory variables (free-rider. risk and time horizon) as well as some member characteristics on their tendency to invest (model 3) and on their tendency to exert control (model 4). These models are also analysed employing ordinary least squares (OLS). The first model is:
i
 
0
 
1
i
 
2
i
 
3
i
 
4
i
  i
(3) where INVESTMENT refers to a multi-item variable that measures the propensity to invest
(see appendix) and FREE refers to the free-rider problem (type of participation that the member prefers, number of years being member, sensitivity to admit new members, easiness of recovering contributions). RISK considers different proxies for the member’s risk aversion (investing in the cooperative is highly risky, preference for the diversification of products). HORIZON to different proxies related with member view of the firm as a long/short term business (preference for the long term earnings and permanency desire) and
OTHER refers to the percentage of member’s incomes from the agricultural activity.
According to the Property Rights Theory, the more the member may be affected by the freerider problem (not agreement with the policy of one member one vote, larger time as member, more reluctant to the admission to new members and more difficulty to recover their contributions) less investing effort will make. In a same way, their propensity to invest will be diminished by their larger perception of risk and for their interest on product diversification. On the contrary, investment will decrease with the preference for short term earnings and with the permanency desire. Finally, a positive effect is expected for the percentage of revenues that are obtained of the agricultural activity.
The second model is:
i
 
0
 
1
i
 
2
i
 
3
i
 
4
i
  i
(4) where CONTROL includes the member’s propensity to exert control measured by a multiitem variable (see appendix). The other variables are the same ones included in model (3).
The less defined the Property Rights among members are, the fewer incentives members will have to exert control. Thus, a larger conscientiousness on the free-rider problem, a larger disparity with the firm aversion to risk and shorter temporal horizon will imply less

interest for exerting control. On the other hand, the higher percentage of revenues coming from the agricultural activity, more motivated will be the member to exert control.
Results of models (1) to (4) are shown in Tables 2 to 5. in Tables 2 and 3. Tables 2 and 3 present the effect of some member’s characteristics on the objectives and on the level of satisfaction, respectively. In Tables 4 and 5 the results on the influence of the Property
Rights Theory variables on the tendency of both to invest and to exert control are presented.
Results of models 1 and 2 are shown in Tables 2 and 3. Tables 2 and 3 present the effect of some member’s characteristics on the objectives and on the level of satisfaction, respectively.
We observe on Table 2 that the directors value in more the objectives analysed, being the difference statistically significant with non-board-members. This result could imply larger implication on exerting control by members of the board. We also find that members with high percentage of their incomes coming from the agricultural activity value in more the proposed objectives. This result is also logic, given that their incomes are less diversified.
INSERT TABLE 2 ABOUT HERE
However, we do not find relevant differences on valuing objectives when we compare members basing on the criteria of their contribution to the total product and on the number of years they are members of the cooperative.
Table 3 presents similar analysis but employing the member’s satisfaction as dependent variable. Results show that satisfaction is higher for directors. Thus, it seems that the fact that they are involved on the management of the firm make them more satisfied. We also find that members that contribute in more to the final product are overall more satisfied, being this result statistically significant at a 1% level. The fact of assuring the sale of the product and getting a good sale price can be determinant for such a result.
INSERT TABLE 3 ABOUT HERE
Relative to the level of contribution to the final product and to the number of years being member of the cooperative, we do not find that they have any statistically influence on the level of satisfaction. However, members that contribute in more to the final product are slightly more overall satisfied, statistically significant at a 1% level. In this sense, to assure the sale of the product and to get a better sale price are the more relevant variables for the members with larger contributions to the final product of the cooperative.
Therefore, we can conclude that directors value in more the objectives of the cooperative and are more satisfied of pertaining to the cooperative. May be the fact of taking an active part in the day to day decision taking makes them identifying in more with the cooperative and valuing in more its advantages. However, these differences do not exist when we consider their contribution to the final product and the number of years being member of the cooperative. This may be because the important thing in order to have some influence in the

cooperative is the fact of being member and not the relative contribution to the final product and the number of years pertaining to the cooperative.
All members highly value both the objectives and the satisfaction variables examined. Thus, we can not strictly speaking say that there are agency conflicts in the sample of cooperatives examined. However, we find that directors and members with higher percentage of their incomes depending on the agricultural activity value in more both the objectives and the satisfaction variables proposed.
In Table 4 we present results on the effect of Property Rights Theory variables on the member’s propensity to invest. Relative to the free-rider problem, we observe statistical differences on investing patterns between members that prefer different participation types in the General Assembly. Therefore, the preference for having a number of votes related to their contribution to the cooperative final product is not a disincentive for the member when investing in the cooperative. This result is opposite to the one expected by the Property
Rights Theory. This evidence could be explained by the fact that those members with more propensity to invest give no major importance to the voting system but obviously prefer that the vote is related to the investing effort. The time of permanence in the cooperative does not influence in the propensity to invest. However, we find a statistical positive relation between the preference to the admission of new members and the member’s investor effort.
This result is the opposite to the one described by the Property Rights Theory. Therefore, members that invest more seem not to worry about the fact that new members take profit of the results of their previous investments but on the fact that the new members could tend to dedicate shorter effort to new investments. Finally, following the Property Rights Theory, we find that members thinking that it is easier to recover their contributions present a larger propensity to invest. This result is the only one that gives support to Property Rights Theory.
INSERT TABLE 4 ABOUT HERE
Relative to the variables related to risk, we find that members do not have a different behaviour relative to their propensity to invest depending on their opinion about the riskiness of investing on the cooperative. As it was commented previously, the members of the cooperative of the sample analysed think that the investment in the cooperative does not imply excessive risk and therefore, it does not influence their decision about being member of not. However, we observe a significant and positive relationship between members that want larger diversification and the readiness to carry out investments. This result neither is explained by the Property Rights Theory. It could be due to the fact that the members that are more interested in investing prefer to assume less risk. So, in general, the farmers think that they are not assuming excessive risk when investing but those that more willing to invest prefer to reduce the risk to the minimum.
Relative to the investing temporal horizon, we do not observe that those members that prefer short term investments, in order to that the new members do not benefit of their previous investments, have shorter desire on investing (like the theory of the rights of property suggests). Therefore, the term is not link with the investing effort but to other time-related variables as it could be the desire of remaining in the cooperative. When the member wants to remain in the cooperative longer time, higher probability will be that the new members take advantage of the old member's investing effort, and less desires he/she will have to invest. As we can observe, a positive relationship takes place among these two variables.

Consequently, under-investment problems related with the theory of the rights of property are neither observed. The member that has larger desire to continue in the cooperative also wants to carry out a larger investing effort that assures him an appropriate running of the cooperative.
On the other hand, we find that those members whose revenues depend larger on the agricultural activity are more inclined to make a larger investing effort, maybe to assure the permanency in the cooperative and to increase the performance of the cooperative.
Finally, Table 5 shows the results on the relation between Property Rights Theory variables and the propensity to exert control. First of all, we observe that two free-rider associated variables gives support to the property rights theory. Concretely, those farmers that pertain longer time to the cooperative and that agree on the admission of new members are more inclined to exert control. The reason for such relation can be due, first of all, to oldest members that are already aware of the possible advantages that new members can take on previous investments. On this sense, maybe they want to exert larger controls on the resources. As for the admission of new members, the reasoning can be the same one, maybe they are agree but, they feel the necessity to take decisions to safeguard their interests.
On the other hand, we find that the result for the participation type variable is not statistically significant. That is to say, those members that value in more that the decisions are taken depending on the contribution of the members are not prone to exercise the control. The members, aware that the law of cooperatives does not allow this possibility, have incentives to exert control of the cooperative activity by real and not hypothetical reasons. Finally, as for the free-rider problem, those members that think that it is easier to recover the initial contribution are highly incentivated to exert control. This result is opposited to the one suggested by the property right theory. Normally, in case that it is easy to abandon the cooperative without incurring in economic losses, members will not make any supervising effort and would simply finish their relation with the cooperative in case that the cooperative does not fulfil their expectatives. A possible explanation is that the member that thinks of the easiness of abandonment tries to be implied in the control to make sure the correct administration of the society and to avoid the march of the members.
Circumstance that could go in detriment and the survival and the dimension of the cooperative.
INSERT TABLE 5 ABOUT HERE
Focusing on risk, we do not find that risk-associated variables have any statistical influence on control. As we commented previously, it seems that the members of the sample examined are risk averse, but consider that their investment in the cooperative does not present a high risk. Therefore, it is logic that they are not motivated to exert control.
For the time horizon (preference for the short-term earnings and wish of permanence), we observe that those members that prefer long term earnings present a larger propensity to the control. This is logical if we think that the long term investments endow the agent a larger discretionarity and, therefore, it increases the supervision necessity. At the same time, we find that the wish of permanence has a positive and significant effect on control. Those members that want to remain more time as cooperative members want to have more control on the administration.

Finally, as it was supposed, members whose revenues depend largely on the agricultural activity are prone to exert large control.
In sum, we observe certain influence of the property rights theory variables when exerting the control of the cooperative. Mainly, when focusing on the temporary horizon of the investments and on some free-rider related variables
The large power that the cooperative managers have joint to the fact that property rights are not properly defined make that the agency theory and the property rights theory are a good framework to study the members-cooperative relation. Our final sample includes 277 personal surveys to members of agricultural cooperatives seated at the Region of Murcia.
Basing on the agency theory we first examined possible conflict of objectives between members and managers as well as the possibility of different level of satisfaction. In second place we tested how do some property rights variables (free rider. risk and time horizon) affect the members’ propensity to invest and to exert control.
The results show that members highly value all proposed objectives and they are highly satisfied of being cooperative members. We also find that members belonging to the Board and members with higher percentage of their incomes depending on the agricultural activity present higher values for both objectives and level of satisfaction.
Relative to the property rights theory, only for members that assume that it is not difficult to recover their initial investment it seems that that the free-rider problem is observed. The rest of variables associated to the property rights theory are not significant (tenure on the cooperative or are contrary to the theory (type of participation and desire of new members' admission). Neither the investor behaviour is explained by the problem of the different levels of risk assumed, derived of the property rights theory (the variables relatives to investing in the cooperative supposes a great risk and the preference for the diversification present a non significant relation and the opposite sign to the one predicted by the theory, respectively). In addition, the problem of the temporary horizon neither explains the investing effort. In this sense, the variables related to the desire for the short term earnings and to the permanency desire present a non significant and opposite to the property right theory. Therefore, we cannot affirm that the property right theory explains the investor behaviour of the members and that it is influenced by other characteristics as the desire of stability and growth of the cooperative. We observe, as a control variable, that those members whose incomes depend in large of the agriculture activity are more inclined to invest.
Focusing on the effect that property rights variables have on the propensity to exert control, we observe some evidence of the presence of the free-rider problem when exercising the control (shown by the variables relatives to the member's tenure and the admission of new members). However, the questions relative to the type of participation that the member prefers and to the easiness of recovering the initial investments does not present a significant effect and a contrary sign to the arguments expressed by the property right theory, respectively. We do not find that the variables associated to risk influences the control, but we find evidence of the problem of the temporary horizon when exercising the control, since

the members that want benefits to longer term and they have intention of remaining more time in the cooperative are more inclined to the supervision. Therefore, we find certain evidence of the free-rider problem and a clear effect of the temporary horizon. Finally, those members whose incomes depend in bigger quantity of the agricultural activity are more motivated to controlling the cooperative decisions.
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Table 1. Descriptive statistics
Variable Average Median
Standard deviation
Minimum Maximum
Objectives
To assure the sale of the products
To assure the collection of the products
Get a better sale price
To assure a better purchase price
Availability of services (consultancy, formation
…)
Acquiring useful knowledge
Not worrying on marketing
Satisfaction
8.447
8.367
7.777
6.955
7.727
7.577
8.477
Satisfaction of being cooperative member
Getting a high probability of collecting the products
Getting a satisfactory sell price
8.413
8.603
Getting access to other satisfactory services
(financing, formation …)
7.750
Getting a satisfactory purchase price 7.023
Getting access to satisfactory technical consultancy 7.760
7.608
Getting access to useful knowledge
Being able to not worrying on marketing
7.835
8.428
Propensity to invest
Disposal attitude to carry out economic efforts
Disposal attitude to sacrifice the short term benefit
Disposal attitude to carry out changes in the cooperative
Propensity (o tendency) to exert control
Propensity (o tendency) to exert control
Frequency of meetings of the General Assembly
Attendance to the assembly
Other opinions and characteristics
Numbers of years being member
Director
%Incomes from agricultural activity
Level of contribution to the total product
Type of participation
Admission of new members
Easiness to recover contributions
Investing in the cooperative is highly risky
7.515
6.358
7.950
3.776
8.178
7.646
18.503
0.117
54.250
0.401
0.267
7.279
7.023
4.357
9.000
9.000
8.000
8.000
8.000
8.000
9.000
9.000
9.000
8.000
8.000
8.000
8.000
8.000
9.000
8.000
7.000
8.000
3.000
8.500
9.000
17.500
0.000
50.000
0.000
0.000
8.000
8.000
4.000
2.045
2.096
2.115
2.979
2.261
2.302
2.014
1.665
1.667
2.149
2.833
2.208
2.178
1.947
1.892
2.175
2.895
2.017
3.075
2.041
2.814
10.975
0.322
36.751
0.491
0.443
2.918
2.684
3.041
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
2.000
0.000
2.000
0.000
0.000
0.000
0.000
0.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
66.000
1.000
100.000
1.000
1.000
10.000
10.000
10.000

Product diversification
Permanency desire
Preference for long-term earnings
7.079
8.876
6.382
8.000
9.000
7.000
2.827
1.661
2.609
0.000
0.000
0.000
10.000
10.000
10.000
Table 2. OLS Regressions on the influence of members’ characteristics on the objectives
Panel A: Effect of member’s characteristics on marketing related objectives
Variable Coefficient Standard Error
Constant
Numbers of years being member
Director
% Incomes from agricultural activity
31.743
-0.047
3.345
0.029
Level of contribution to the total product
Adjusted R2
0.701
0.041
F 3.590***
Panel B: Effect of members’ characteristics on non-marketing related the objectives
Variable Coefficient
Constant
Numbers of years being member
Director
% Incomes from agricultural activity
Level of contribution to the total product
Adjusted R 2
20.096
-0.039
2.739
0.039
1.143
0.058
F 4.767***
Note: *** and ** denote statistical signification at a 1% and 5%, respectively.
1.173***
0.038
1.258***
0.012**
0.909
Standard Error
1.088***
0.036
1.169**
0.011***
0.844
Table 3. OLS Regressions on the influence of member characteristics on the satisfaction
Variable
Constant
Numbers of years being member
Coefficient
59.250
-0.039
Standard Error
2.195***
0.071
Director
% Incomes from agricultural activity
Level of contribution to the total product
Adjusted R 2
5.546
0.069
0.497
0.057
F 4.346***
Note: *** and ** denote statistical signification at a 1% and 5%, respectively.
2.335**
0.023***
1.758
Table 4. OLS Regressions on the influence of Property Rights Theory variables on the propensity to invest
Coefficient Standard Error
Constant
FREE RIDER
Type of participation
Number of years being member
Admission of new members
Easiness to recover contributions
RISK
Investing in the cooperative is highly risky
Product diversification
TIME HORIZON
5.262
1.572
0.004
0.450
0.272
-0.070
0.210
2.397**
0.740**
0.031
0.119***
0.127**
0.114
0.122*

Preferente for short-term earnings
Wish of permanence
OTHER
%Incomes from agricultural activity
-0.085
0.752
0.022
Adjusted R2
F
0.203
7.729***
Note: ***. **. and * denote statistical signification at a 1%. 5%. and 10%. respectively.
0.126
0.204***
0.009***
Table 5. OLS Regressions on the influence of Property Rights Theory variables on the propensity to exert control
Constant
Coefficient
5.054
Standard Error
2.682*
FREE RIDER
Type of participation
Number of years being member
Admission of new members
Easiness to recover contributions
0.745
0.081
0.254
0.536
0.827
0.035**
0.133*
0.142***
RISK
Investing in the cooperative is highly risky
Product diversification
TIME HORIZON
Preferente for short-term earnings
Wish of permanence
OTHER
%Incomes from agricultural activity
Adjusted R2
F
0.197
0.088
-0.426
0.544
0.020
0.152
5.703***
0.128
0.136
0.0141***
0.227**
0.010*
Note: ***. **. and * denote statistical signification at a 1%. 5%. and 10%. respectively.
Appendix: Variables examined in the questionnaire
Variable Question made in the questionnaire
Indicate weather the following reasons influence you on the
Objectives decision to be member of the cooperative (0 = not at all. 10 = Yes. very much)
Marketing related objectives
To assure the sale of the products
To assure the collection of the products
Get a better sale price
To assure a better purchase price
To assure the sale of the products
To assure the collection of the products
To get a better sale price
To assure a better purchase price
Non-marketing related objectives
Availability of services (consultancy, formation
…)
Acquiring useful knowledge
Not worrying on marketing
Availability of services (consultancy, formation …)
To Acquire useful knowledge for the development of this activity
Easiness of the commercialization in order to focus on production
Satisfaction
Satisfaction of being cooperative member
To assure the collection of the products
Indicate your agreement degree with the following statements (0 = total disagreement. 10 = total agreement)
Level of satisfaction with the overall relationship with the cooperative
To assure the collection of the products
Getting a good sale price Getting a good sale price

Getting a good purchase price
Availability of technical services
Getting a good purchase price
Availability of technical services Consigue disponer de servicios de asesoramiento técnico adecuados
Availability of services (consultancy, formation
…)
Acquiring useful knowledge
Availability of services (consultancy, formation …)
To Acquire useful knowledge for the development of this activity
Not worrying on marketing Easiness of the commercialization in order to focus on production
Indicate your agreement degree with the following statements (0 =
Propensity (o tendency) to invest total disagreement. 10 = total agreement)
Disposal attitude to carry out economic efforts You are willing to carry out economic efforts for the appropriate
Disposal attitude to sacrifice the short term benefit
Disposal attitude to carry out changes in the cooperative running of the cooperative
You are willing to sacrifice your own immediate benefit in order to get a better position for the cooperative in the long run. you are willing to carry out the necessary changes in irder that the
Propensity to exert control cooperative can adapt to the market
Indicate your agreement degree with the following statements (0 = total disagreement. 10 = total agreement)
Propensity (o tendency) to exert control You are willing to carry out economic efforts for the appropriate running of the cooperative
Frequency of meetings of the General Assembly You consider appropriate the frequency that the General Assembly meet
Attendance to the assembly
Other opinions and characteristics
Numbers of years being member
You attend to all the meetings of the General Assembly
How long (in years) are you member of the cooperative?
Are you member of the Board of Directors right now (0 = no. 1 =
Director yes)
From your total revenues. what % come from the agricultural
%Incomes from agricultural activity activity?
Compared product with the rest of members of your cooperative.
Level of contribution to the total product you are: 0 = among the members that contribute more. 1 = among those that contribute less
What type of participation do you prefer for the General
Type of participation
Admission of new members
Assembly? 0 = only one vote per member. 1 = a number of votes according to the product contribution
Indicate your agreement degree with the following statement (0 = total disagreement. 10 = total agreement): I would like that new members incorporate to the cooperative
Indicate your agreement degree with the following statement (0 =
Easiness to recover contributions
Investing in the cooperative is highly risky
Product diversification
Permanency desire
Preference for short-term earnings total disagreement. 10 = total agreement): In case that I would be interested. it would be easy to get the money I invested back
Indicate your agreement degree with the following statement (0 = total disagreement. 10 = total agreement): Investing in the cooperative is highly risky
Indicate your agreement degree with the following statement (0 = total disagreement. 10 = total agreement): I would like that the cooperative diversify its products in order to diminish its risk
Wish to continue being member of the cooperative
Indicate your agreement degree with the following statement (0 = total disagreement. 10 = total agreement): I prefer short-term earnings