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Determinants of Profitability: Evidence of Renewable Energy Companies

In: Global, Regional and Local Perspectives on the Economies of Southeastern Europe

Author

Listed:
  • Fatbardha Morina

    (Epoka University)

  • Chrysanthi Balomenou

    (Epoka University)

  • Uğur Ergün

    (Epoka University)

Abstract

Energy in the world is being provided using fossil fuels as a source because they have the lowest costs and it is considered that we are living in an era of fossil-fueled economies. But due to global warming and climate change, it is necessary to find alternative sources in order to provide energy for future generations and to end the age of fossil fuels. The demand and consumption of the energy is increasing but the resources are limited. In this way, it is generating interest in renewable energy in order to reduce the negative effects on the environment and to create sustainable development. The question is how profitable, and which are the risks that renewable energy companies face? In this way, the aim of this paper is to examine the effect of firm-specific characteristics and macroeconomic determinants of renewable energy companies using the Fixed Effects Model spanning the period 2005–2018. The empirical result shows that internal factors that depend on firm management are significant and have a positive impact on profitability. The profitability is affected positively by capital, size, and capital productivity while leverage of the firm has a negative impact. Additionally, it is investigated the effect of macroeconomic factors that seems to be insignificant in profitability. This study suggests some policies that should follow by policymakers in order to promote renewable energy companies and to create suitable conditions for sustainable development. The development of renewable energy companies is associated with economic, social development, climate changes mitigate that reduce emissions in the environment and have a positive effect on health.

Suggested Citation

  • Fatbardha Morina & Chrysanthi Balomenou & Uğur Ergün, 2021. "Determinants of Profitability: Evidence of Renewable Energy Companies," Springer Proceedings in Business and Economics, in: Alexandra Horobet & Lucian Belascu & Persefoni Polychronidou & Anastasios Karasavvoglou (ed.), Global, Regional and Local Perspectives on the Economies of Southeastern Europe, pages 243-256, Springer.
    • Handle: RePEc:spr:prbchp:978-3-030-57953-1_15
    DOI: 10.1007/978-3-030-57953-1_15
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