Unleashing the Metaverse: Assessing the Effects of China’s City Pilot Policy on Firm Performance

This study investigates the influence of the metaverse pilot city policy (MPCP) on firm performance using panel data from 127 China’s A-share listed metaverse firms and a difference-in-differences (DID) model. Results indicate that the MPCP can significantly increase the performance of metaverse-related firms. Conclusions are robust after using the PSM-DID method, replacing key variables, and conducting placebo tests. Technological innovation and public attention are recognized as essential mechanisms for the MPCP. Heterogeneity analysis demonstrates that the performance of non-state-owned firms and those located in cities with better economic development responds positively to the MPCP. This study provides a theoretical framework for understanding the micro-mechanisms of influence associated with the MPCP, offering valuable policy insights for non-pilot cities and guiding enterprises to concentrate on pilot cities. • The MPCP increases the performance of metaverse-related firms • Technological innovation and public attention are important mechanisms • Positive impacts are pronounced for non-SOEs and firms in better developed cities • Findings offer policy insights for enterprises and governments