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• We study governance mechanisms in decentralized autonomous organizations (DAOs). • Regression discontinuity design on contested proposals overcomes endogeneity concerns. • Distributed governance mechanisms increase tokenholders value. • Proposal passage increases DAO token returns by 4.7 % at the margin. • Effect amplified by voter participation, DAO democratization, and DAO decentralization. Distributed governance mechanisms increase tokenholders value in decentralized autonomous organizations (DAOs) when decision-making is contested. Using a comprehensive dataset of proposals voted on within blockchain-based DAOs from 2020 to 2024, we exploit a regression discontinuity design on proposals that pass or fail by a close margin around the majority threshold. Local average treatment effects indicate that proposal passage increases DAO token returns by 4.7 % at the margin. Further, a one standard deviation increase in vote participation amplifies this effect by 2.2 %. Proxies for democratization and decentralization also increase the value-creating effect of contested decision-making in DAOs. Our findings contribute to understanding how distributed governance structures create value in digital organizations.
Monaco et al. (Tue,) studied this question.