New York University
Stern School of Business
David L. Yermack is the Albert Fingerhut Professor of Finance and Business Transformation at NYU Stern School of Business, Chairman of the Finance Department, and Director of the NYU Pollack Center for Law and Business. In his research, he focuses on corporate finance, corporate governance, economics of information, and the impact of digital currencies. His major research areas include boards of directors, executive compensation, and the transformation of business processes.
His work has appeared in renowned journals such as the Journal of Financial Economics, Review of Financial Studies, Journal of Finance, Financial Management, Journal of Law, Economics and Organizations, Review of Quantitative Finance and Accounting, and Empirical Corporate Finance. In addition, Professor Yermack teaches joint MBA-Law School courses in Restructuring Firms & Industries and Bitcoin & Cryptocurrencies, as well as PhD research courses in corporate governance, executive compensation, and distress and restructuring.
Abstract: The blockchain is a novel database technology that has become widely known due to its applications to Bitcoin, Ethereum, and other cryptocurrencies. Blockchains are immutable, because their entries cannot be changed retroactively, and they are generally shared widely across the community of users as “distributed ledgers,” a radically different strategy for data security and verification. Blockchains have many potential applications in the financial world, and many prominent stock exchanges are actively studying whether to replace their legacy systems of clearing and settlement with blockchain technology. This could greatly simplify and accelerate the settlement process, reducing costs for investors and broker-dealers. At the same time, much more transparency would exist about the true ownership and real-time transfer of shares. A more extreme application of the technology, already in use by at least one company, would be for firms to operate their own blockchains and issue securities to investors on a peer-to-peer basis, bypassing the stock exchanges entirely. These changes, which are already underway, have vast implications for investors. In the near future, trading is likely to become much quicker and cheaper, and better information will be available about market liquidity and the characteristics of buyers and sellers in the market. Moral hazard behavior by managers and activist investors may become much more difficult, as will trading strategies designed for money laundering or tax evasion purposes. This keynote lecture will discuss these innovations and more briefly consider other potential implications of blockchains for the equity, debt, and derivatives markets.
The full presentation is available here.