This study examines how sentiment exposure shapes corporate innovation investment. We find that firms with higher uncertainty of sentiment exposure significantly reduce their innovation investment, whereas the effects of the degree of exposure are rel...
This study examines how sentiment exposure shapes corporate innovation investment. We find that firms with higher uncertainty of sentiment exposure significantly reduce their innovation investment, whereas the effects of the degree of exposure are relatively ambiguous. Our findings suggest that firms’ heterogeneous responses to investor sentiment influence their innovation investment decisions. Moderation analyses show that the reduction in innovation investment is pronounced for firms with high managerial risk aversion, proxied by large size and high market competition. Our results remain robust when controlling for macroeconomic conditions and using alternative measures of sentiment exposure.