*3.3. Testing the Hypotheses*

According to the analysis results, specifically based on the results from the Fixed Effects model, there is clear evidence to support Hypothesis 1 "*The model with industryspecific determinants and the model with firm-specific determinants are both significant when 5% significance level is adopted in the statistical testing*". In both company-size cohorts, all the models are statistically significant.

When it comes to Hypothesis 2 "*The explanatory power of the included firm-specific determinants is higher than that of the included industry-specific determinants*", the explanatory power for the models with firm-specific determinants for SMEs and Large firms respectively are 0.74/0.76 (ROE), 0.77/0.91 (ROA) and 0.72/0.88 (ROCE), while the R2 for the industryspecific determinants are 0.149/0.23 (ROE), 0.177/0.33 (ROA), and 0.155/0.28 (ROCE). This result means that Hypothesis 2 can be accepted. The models that combine both determinants have the explanatory power of 0.762/0.78 (ROE), 0.796/0.91 (ROA), and 0.74/0.89 (ROCE) (Appendices A and B).

The analysis results of the firm-specific determinants imply that the size in terms of assets matters when a company is large and that the size in assets has a negative effect on the profitability of large firms. Net income and Log of sales appear to have a consistent and significant positive effect on profitability ratios with both firm cohorts, based on the analysis (see Table 4).

Leverage or liquidity did not appear to be consistently significant for neither sizegroup. When Debt to Assets (D\_A) was significant, it was negative for the SMEs and positive for the large firms. Growth in Assets or Sales was not consistently, or at all, significant with either of the cohorts, indicating that the firm-specific determinants related to size and net income, as well as, the ones related to liquidity and leverage, together explain most of the variance in the profitability ratios.

In the analysis of the industry-specific determinants, the growth from the previous year in the share of renewables in electricity consumption appeared to have a significant positive effect on the profitability ratios. The change from the previous year's market concentration had a significant and positive effect on profitability more or less consistently with the SMEs. The change from the previous year's electricity consumption had a significant negative effect on profitability ratios, without exception, in both samples. However, in the sample of large firms, these effects disappeared, when both the firm-specific and industryspecific determinants were included in the FE model. This finding also supports the second hypothesis with regards to the explanatory power of the firm-specific determinants being remarkably higher than that of the industry-level determinants.

Based on the analysis, there was no support for Hypothesis 3: "*The average annual Feed in Tariff (FIT) has a significant positive effect on the RE companies' profitability*". The annual average FIT does seem to have a statistically significant effect on profitability, but the effect is opposite to what was expected. The variable had a negative effect on profitability with both firm size categories in eight tests out of the total twelve. However, the share of FIT-supported firms in the data was unknown in the analysis done in this research and the negative effect could be on the firms that were not receiving any FIT at the time of the analysis.
