Corporate Governance and Blockchains

David Yermack

NBER Working Paper No. 21802
Issued in December 2015, Revised in October 2016
NBER Program(s):Corporate Finance, Law and Economics

Blockchains represent a novel application of cryptography and information technology to ag-eold problems of financial record-keeping, and they may lead to far-reaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate record-keeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w21802

Published: David Yermack; Corporate Governance and Blockchains, Review of Finance, Volume 21, Issue 1, 1 March 2017, Pages 7–31, https://doi.org/10.1093/rof/rfw074

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