Is Investing in Companies Manufacturing Solar Components a Lucrative Business? A Decision Tree Based Analysis

Sebastian Tomczak, Anna Skowrońska-Szmer and Jan Jakub Szczygielski
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Anna Skowrońska-Szmer: Department of Operations Research and Business Intelligence, Wrocław University of Science and Technology, Wyspiańskiego 27, 50-370 Wrocław, Poland
Jan Jakub Szczygielski: Department of Financial Management, University of Pretoria, Pretoria 0002, South Africa

Energies, 2020, vol. 13, issue 2, 1-27

Abstract: In an era of increasing energy production from renewable sources, the demand for components for renewable energy systems has dramatically increased. Consequently, managers and investors are interested in knowing whether a company associated with the semiconductor and related device manufacturing sector, especially the photovoltaic (PV) systems manufacturers, is a money-making business. We apply a new approach that extends prior research by applying decision trees (DTs) to identify ratios (i.e., indicators), which discriminate between companies within the sector that do (designated as “green”) and do not (“red”) produce elements of PV systems. Our results indicate that on the basis of selected ratios, green companies can be distinguished from the red companies without an in-depth analysis of the product portfolio. We also find that green companies, especially operating in China are characterized by lower financial performance, thus providing a negative (and unexpected) answer to the question posed in the title.

Keywords: CHAID; CRT; QUEST models; manufacturing companies; renewable energy sources; financial ratios (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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