The impact of Decentralized Autonomous Organizations on Corporate Governance

Blockchain is a technology that can provide smart solutions to the classical corporate governance inefficiencies, particularly in the relationship between the shareholders and the company. The advancements of the blockchain technology indeed gave birth to a wide variety of use cases, among which, a novel form of organizations called Decentralized Autonomous Organizations (DAOs), is driving a paradigm shift in the organizational design, by introducting governance mechanisms that are independent by a central authority and by enabling permissionless participation. On the other side, actual governance theories do not encompass the alienation of trust between parties and the union of ownership and control that DAOs are enabling. The aim of this study is thus to explores how the use of the blockchain can shape the decision-making process inside an organization and providing, through a game theoretical approach, a model to describe the shareholders’ behavior in a DAO. The model focus on the relationship between voting costs, bias and the concentration of the ownership in determining the approval or rejection of proposals inside a DAO.