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Investor Sentiment, Innovation Investment and Cash Dividend

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Listed:
  • Xiaoyang Xu
  • Adubofour Isaac
  • Lizhong Hao
  • Dandan Wang

Abstract

Investor sentiment plays a critical role in corporate innovation investment. Firms resort to innovation in their attempts to satisfying the demands of their investors. We argue empirically in our study that investor sentiment has impact on firms’ innovation decisions. We also argue that, strong negative sentiment has higher propensity to foster corporate innovation investment. We analyzed a nine- year panel data ranging from 2009-2017, which consisted of 3,558 Chinese listed firms. A verification of the impact of dividend policy on firms’ innovation investment was conducted. We found that, favorable dividend policy would trigger corporate innovation investment. We also found a statistically significant relationship between innovation investment and firm performance. Our findings showed a positive association between corporate innovation investment and firm performance. We also conducted a series of robustness checks on our empirical models and then discussed the contribution of our study, theoretically and practically.

Suggested Citation

  • Xiaoyang Xu & Adubofour Isaac & Lizhong Hao & Dandan Wang, 2019. "Investor Sentiment, Innovation Investment and Cash Dividend," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(7), pages 1-97, July.
    • Handle: RePEc:ibn:ijefaa:v:11:y:2019:i:7:p:97
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    References listed on IDEAS

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    Cited by:

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    2. Le Quy Duong, 2024. "Stock Mispricing and Firm Innovation: Evidence from an Emerging Equity Market," SN Operations Research Forum, Springer, vol. 5(4), pages 1-21, December.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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