Abstract: This study investigates the risk-benefit assessments of economic agents towards metaverse innovations. Employing event-study methodology and analyzing a dataset comprising 72 news articles and press releases from companies listed in the STOXX All Europe 100 index, our research focuses on how European firms' metaverse entry strategies affect investor reactions. We distinguish between strategic investments in metaverse technologies and vague announcements or minor ventures primarily for promotional purposes. Initially, we observe slightly and significantly negative extraordinary returns in aggregate. However, our analysis reveals a significant contrast in market responses; strategic investments generate positive market responses, whereas vague announcements lead to negative reactions. This study contributes new insights to the sparse literature on metaverse innovations, emphasising the importance of a company's strategic approach to entering the metaverse.

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