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

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  • Sebastian Klaudiusz Tomczak

    (Department of Operations Research and Business Intelligence, Wrocław University of Science and Technology, Wyspiańskiego 27, 50-370 Wrocław, Poland)

  • 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
    Newcastle Business School, Northumbria University, Newcastle NE1 8ST, UK)

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.

Suggested Citation

  • Sebastian Klaudiusz Tomczak & Anna Skowrońska-Szmer & Jan Jakub Szczygielski, 2020. "Is Investing in Companies Manufacturing Solar Components a Lucrative Business? A Decision Tree Based Analysis," Energies, MDPI, vol. 13(2), pages 1-27, January.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:2:p:499-:d:310927
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    2. Sebastian Klaudiusz Tomczak & Anna Skowrońska-Szmer & Jan Jakub Szczygielski, 2021. "Is It Possible to Make Money on Investing in Companies Manufacturing Solar Components? A Panel Data Approach," Energies, MDPI, vol. 14(12), pages 1-20, June.
    3. Mehmet Efe Biresselioglu & Muhittin Hakan Demir, 2022. "Constructing a Decision Tree for Energy Policy Domain Based on Real-Life Data," Energies, MDPI, vol. 15(7), pages 1-15, March.

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