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Head of Corporate Finance Research Center, Dr., tenured professor
Our colleagues will make a presentation "Impact of Blockchain on the Principal-Agent Conflict" at 17TH EIASM WORKSHOP ON CORPORATE GOVERNANCE.
Ilya Ivaninskiy, PhD student, National Research University “Higher School of Economics”
Irina Ivashkovskaya, professor, Head of School of Finance, National Research University “Higher School of Economics”
Joseph Mc Cahery, J.D. Full Professor, Tilburg Law School, Department of Business Law, Tilburg University
We analyze the impact of digital transformation of business and particularly the blockchain technology on the principal-agent conflict between management and shareholders within an organization. Blockchain technology has the ability to change fundamentally the distribution of power within an organization, potentially mitigating the conflict. While there are several studies of blockchain impact on the corporate governance, the empirical evidence has so far been scarce. We analyze the sample of 2813 of NYSE, Nasdaq and AMEX-traded firms for the 2018, which is marked with a rapid blockchain adoption.
We explore the influence of blockchain from three points of view: likelihood of submission of a shareholder proposal; level of support for the proposals (sponsored both by management and by shareholders); likelihood of a proxy contest against the firm.
The results that we received suggest that firms involved in the blockchain space generally have a lower level of principal-agent conflict. This conclusion is supported by two results. First, we find that on average firms, involved in the blockchain space receive more shareholder-sponsored proposals, which is an indication of more active shareholder base, which indicates lower level of conflict. Second, while an average level of support of proposals is lower for blockchain-involved firms, there is no difference in the likelihood of a management-sponsored proposal to pass. The preliminary results suggest that firms involved in the blockchain space have a lower likelihood of a proxy contest launched against them. However, to confirm or deny this hypothesis we will need a broader dataset, which we intend to obtain in the upcoming research.
We contribute to the literature on corporate governance, shareholder activism and business digitalization. To the best of our knowledge, our paper is among the first empirical papers, exploring the impact of blockchain on corporate governance.