Do metaverse implementation announcements enhance firms’ stock market value in China? a signaling theory perspective

Shichao Wang, Jinan Shao, Yueyue Zhang, Wuyue Shangguan

Research output: Journal PublicationArticlepeer-review

Abstract

Purpose
The metaverse has garnered increasing attention from researchers and practitioners, yet numerous firms remain hesitant to invest in it due to ongoing debates about its potential financial benefits. Therefore, it is crucial to analyze how the implementation of metaverse initiatives affects firms’ stock market value – an area that remains underexplored in the existing literature. Additionally, there is a significant lack of research on the contingency factors that shape the stock market reaction, leaving a noticeable gap in managerial guidance on the timing and benefits of investments in the metaverse. To narrow these gaps, we examine whether and when the implementation of metaverse initiatives enhances firms’ stock market value.

Design/methodology/approach
Based on 73 metaverse implementation announcements disclosed by Chinese listed firms during January 2021–August 2023, we employ an event study approach to test the hypotheses.

Findings
We find that metaverse implementation announcements elicit a positive stock market reaction. Moreover, the stock market reaction is stronger for technology-focused announcements and smaller firms, or when public attention to the metaverse is higher. Nevertheless, firms’ growth prospects do not significantly alter the stock market reaction.

Originality/value
This study extends the nascent literature on the metaverse by applying signaling theory to offer novel insights into the signaling effect of metaverse implementation announcements on stock market value and the boundary conditions under which the effectiveness of the signal varies. Besides, it provides managers with important implications regarding how to tailor the investment and information disclosure strategies of the metaverse to more effectively enhance firms’ stock market value.
Original languageEnglish
JournalIndustrial Management & Data Systems
DOIs
Publication statusPublished - 23 Oct 2024

Keywords

  • Metaverse
  • Stock market value
  • Firm size
  • Public attention
  • Signaling theory
  • Event study

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