Market Feedback about Emerging Technologies

Sean S. Cao, Itay Goldstein, Jie He and Yabo Zhao

No 34940, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How do firms make decisions on investments in emerging technologies? We find that firms adjust AI/green investments in response to market reactions to announcements of such emerging-technology investment plans. Through a battery of tests, we show that this pattern is more likely due to active managerial learning from the market than alternative explanations such as a passive reflection of underlying fundamentals that drive both market reactions and corporate actions. Firms are more likely to act on feedback about emerging technologies than about other investments, particularly when market participants have more expertise in these areas and when firms face greater uncertainty.

JEL-codes: D22 E22 G14 G31 J23 (search for similar items in EconPapers)
Date: 2026-03
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