Legal tech and blockchain for corporate governance and shareholders

Abstract

Blockchain applications have largely been short-lived phenomena in the (classical) corporate governance arena over the past few years. However, at the same time, blockchain has also found its place in addressing agency problems in modern organizations, such as Decentralized Autonomous Organizations (DAOs), offering valuable opportunities to eliminate classical inefficiencies. After a brief introduction to the agency problem and its associated costs in corporations, this chapter explores blockchain technology as a potential solution to this issue. Furthermore, the chapter delves into these DAOs, which, at least in theory, eliminate the agent and its accompanying problem while incorporating artificial intelligence. In the governance of more traditional corporations, blockchain should also be considered a useful tool for overcoming several agency problems and inefficiencies. However, regulatory burdens, uncertainties, as well as concerns related to accountability and other associated costs and interests, slow down the adoption of blockchain in the corporate law and governance environment.