Abstract:
This paper presents findings from an investigation into the stay or exit decision of vessel owners in Scottish fisheries subject to stock recovery measures. Semi-structured in-depth interviews were conducted with 39 vessel owners during and following a vessel buy-back scheme. Empirical results show key factors affecting the decision to stay or exit, which include the owner's age, other sources of income, the existence of a successor to the business, impact on other involved family members, and expected future business performance, which in some cases was expected to be business failure. Owners did not use any formal financial methods or techniques for their decision-making. Advice sought from accountants was mostly on minimising tax liability. Owners expecting profitable operation considered how to use government grants to enable fresh investment in the fishery. For vessels with poor expected performance, owners' principle concern was 'will I clear my feet?' - would there be a positive net cash position on winding up the business? If they could not get clear of debt by winding up, skippers would continue in unprofitable or low profit boats, as long as they could get a wage for their labour and repay the bank loan, because they saw no other option. This could partly explain the time lag between decline in average profits and decline in fleet capacity in a fishery, identified by other authors. Negative or low accounting profit and zero or negative return on assets may not on their own cause owners to quit.
