The Impact of the Digital Transformation of Business on Corporate Governance. An Overview of Recent Studies

  • Ilya Ivaninskiy National Research University Higher School of Economics

Аннотация

This article presents a survey of recent studies on the impact of digitalisation, and particularly blockchain technology, on corporate governance and the principal-agent conflict in companies. The principal-agent conflict has been a centerpiece of the corporate governance research for more than 40 years. However, recent technological developments, and blockchain in particular, has created new avenues for exploration.

We survey the implications of blockchain for the principal-agent conflict in three parts: 1) the organisational environment, and the creation of the conflict; 2) common observable instances of conflict; 3) actions necessary to maximise the value of blockchain implementation. We limit the studied conflict to the relationship between shareholders and management. We also limit the blockchain use cases to those currently in testing. The applications for blockchain in securities trading and for corporate functions automation via ‘smart’ contracts are both analysed. We also evaluate the implications for investor activism.

Our results indicate that passive investor behaviour is at the core of the environment that creates conflict. One of the key drivers of low activity is a non-transparent voting process resulting in low participation rates. Studies indicate that blockchain can solve this issue, thus mitigating the conflict, and is an attractive proposition for board members. The most frequent instances of conflict are related to the composition of boards of directors and compensation schemes observed at shareholder voting. Using blockchain for settlement would eliminate ambiguity in shareholder registers and prevent such strategies as “empty voting”. Smart contracts promise automation of governance functions like audit, which also weakens conflict. Even skeptics agree that voting is a promising application for blockchain. However, there is evidence that blockchain poses its own problems, and that smart contracts are associated with practical risks. Some critics argue that blockchain is less efficient than conventional corporate procedures.

Blockchain is among the top digital technologies that business leaders have to monitor closely. As such, this overview of the most up-to-date thinking on the subject is relevant for anyone interested in the future of corporate governance and the digitalisation of business processes. This evaluation serves to highlight the current status of this innovative resource, outlining for both professionals and newcomers what exactly blockchain’s potential uses and implications are, while also outlining where a lack of quantitative research creates opportunities for further contributions to the research field. This study will also be instructive for those investigating blockchain implementation and the optimal characteristics of the solution.

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Опубликован
2019-12-22
Как цитировать
Ivaninskiy, I. (2019) «The Impact of the Digital Transformation of Business on Corporate Governance. An Overview of Recent Studies», Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438, 13(3), сс. 35-47. doi: 10.17323/j.jcfr.2073-0438.13.3.2019.35-47.
Раздел
Новые исследования