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In a technology-driven, digital world, many of the largest and most successful businesses now operate as “platforms.” Such firms leverage networked technologies to facilitate economic exchange, transfer information, connect people, and make predictions.
Platform companies are already disrupting multiple industries, including retail, hotels, taxis, and others, and are aggressively moving into new sectors, such as financial services.
This paper examines the distinctive features of this new business model and its implications for regulation,notably corporate governance. In particular, the paper suggests that a tension exists between the incentives created by modern corporate governance and the business needs of today’s platforms. The current regulatory framework promotes an unhealthy “corporate” attitude that is failing platforms, and a new direction (what we term “platform governance”) is urgently required.
In identifying this new regulatory direction, the paper considers how firms might develop as successful platforms. Although there is no “one-size-fits-all” solution, the paper describes three interconnected strategies: (i) leveraging current and near-future digital technologies to create more “community-driven” forms of organization; (ii) building an “open and accessible platform culture”; and (iii) facilitating the creation, curation, and consumption of meaningful “content.” The paper concludes that jurisdictions that are the most successful in designing a new “platform governance” based on the promotion of these strategies will be the primary beneficiaries of the digital transformation.
We are witnessing a quiet but quick transformation of corporate governance. The rise of digital technologies and social media are forcing companies to reconsider how they organize themselves and structure firm governance.
What is...Read more
Passively managed index funds now hold over 25% of U.S. mutual fund and ETF assets. The rise of index investing raises fundamental questions about monitoring and corporate governance. We examine the voice and exit mechanisms and find that...Read more
This study examines the challenge of implicit communications - qualitative statements, tone, and non-verbal cues - to the effectiveness of enforcing corporate disclosure regulations. We use Regulation FD setting, given that SEC adopted the...Read more
Auditors play a major role in corporate governance and capital markets. Ex ante, auditors facilitate firms’ access to finance by fostering trust among public investors. Ex post, auditors can prevent misbehavior and prevent financial fraud by...Read more