On Alphaville, Izabella Kaminska comments on the pecking order induced by initial coin offerings (ICOs).
All of this raises an important point about actual shareholder rights within these structures. Say a legally-incorporated institution with actual shareholders dishes out an uncapped amount of tokens promising a share of revenues or dividends via the ICO process. Do shareholders’ rights to those revenue/dividends trump rights of the token holders? And if so, how does that square with the way risk is distributed through these systems? As Unseth notes, more often than not, it’s the token holders taking the bulk of the early concept risk, yet the inferiority of their ranking relative to shareholders kind of sees the latter receiving a free lunch.
In a Bank of Finland discussion paper, Bill Francis, Iftekhar Hasan and Qiang Wu argue that there is evidence for academic economists to be useful after all. Academics on the board of directors “are valuable advisors and effective monitors.” The authors write in the abstract:
Directors from academia served on the boards of around 40% of S&P 1,500 firms over the 1998-2011 period. … We find that companies with directors from academia are associated with higher performance and this relation is driven by professors without administrative jobs. We also find that academic directors play an important governance role through their advising and monitoring functions. Specifically, our results show that the presence of academic directors is associated with higher acquisition performance, higher number of patents and citations, higher stock price informativeness, lower discretionary accruals, lower CEO compensation, and higher CEO forced turnover-performance sensitivity. Overall, our results provide supportive evidence that academic directors are valuable advisors and effective monitors and that, in general, firms benefit from having academic directors.
The rules of procedure (PDF) of the Faculty of Economics and Social Sciences at the University of Bern. An overview of the rules governing the academic programs.