Entrepreneurial Signals and External Financing: How Investment Discourse Sentiment Moderates the Effects of Patents and Market Orientation

Existing research suggests that information asymmetry remains a core barrier to entrepreneurial firms’ external financing. Drawing on signaling theory and a signal cost perspective, this study examines how two key entrepreneurial signals—high-cost patent signals and low-cost international market orientation (IMO) signals—shape the scale of firms’ external financing in Korea. We argue that although both signals are positively associated with financing scale, their effectiveness is differentially conditioned by investment discourse sentiment. Specifically, positive discourse sentiment amplifies the financing effects of both signals, whereas negative discourse sentiment attenuates the effect of IMO but strengthens the impact of patent signals, indicating that in pessimistic contexts investors rely more heavily on high-cost, externally verifiable signals when valuing and allocating capital. Using data from the Korean Venture Business Survey (2021–2023) and investment discourse sentiment measures constructed via LDA topic modeling and dictionary-based sentiment extraction, our empirical analyses support these hypotheses.