The financial performance of sustainable power producers in emerging markets

Abstract

Abstract This research provides novel results and contributes to the existing literature by: (1) introducing into the analysis new variables that link the type of renewable resource (solar, wind) with financial performance; (2) studying private and public firms whose main activity is only renewable power production; (3) analyzing a large group of emerging markets, and (4) providing an overall comparison of the financial performance of fossil fuel-based vs. renewable energy-based power producers. We acquired a large longitudinal dataset describing only renewable energy companies from 16 emerging markets in the period from 2000 to 2017. The study provides comprehensive results from a variety of panel regressions that explain the return on assets (ROA) and return on equity (ROE). The results regarding the type of renewable resource indicate that ROA is higher by 0.09 for solar power producers. The legal form of the company (private vs. public) does not impact ROA but indicates that ROE is lower by 0.09 for public companies. The results are mostly similar regarding the return on equity. The results indicate that the new variables introduced into the investigation are relevant in determining the financial performance of sustainable power producers.