Blockchain will boost company value: Research

Using blockchain technology to allow e-voting at annual general meetings would likely increase overall company value, latest research from the University of Wollongong shows.

Research conducted by University of Wollongong deputy vice chancellor Alex Frino suggests that introducing e-voting via blockchain would increase attendance and participation by shareholders at AGMs, which in turn would increase company value.

"Participation at AGMs is a recognised problem globally, and five exchanges [Moscow Exchange Group; Tallin Stock Exchange in Estonia; the Abu Dhabi Securities Exchange; Johannesburg Stock Exchange and Toronoto Stock Exchange] have announced blockchain projects to try to remedy this," Frino said.

"In Australia, the ASX have also said that electronic AGMs will be enabled by blockchain, however no actual research existed to suggest whether this might work or not."

The research, based on ASX200 companies, shows more than 37% of shareholders don't attend or vote at AGMs. More than 60% of votes are made by proxy, with less than 2% of shareholders turning up in person to AGMs.

The research found a significant negative correlation between non-attendance and non-voting and company market value. Researchers used this correlation to estimate how increased attendance and voting could positively influence market value.

"We found that by increasing voter participation by 10%, companies could expect an uplift of approximately 6% in their value," Frino said.

"For the top 25 companies on the ASX this would translate to an additional $63.5 billion in value. Theoretically, if the full ASX200 could increase shareholder participation by 10%, the Australian market would gain an additional $998 billion."

In August, the ASX announced that its decision to replace its exchange settlement system in place of distributed ledger technology (DLT) or blockchain could come as soon as December.

ASX chief executive Dominic Stevens said the exchange had undertaken initiatives and industry-wide consultations at "great depth and pace" to roll out DLT in place of its 20-year-old trading clearing house system, CHESS.

Stevens told the market DLT has the potential to make back offices operate more efficiently and function as a "single source of truth" by removing the "massive complexities" around reconciling trades.

Deputy chief executive Peter Hiom said replacing CHESS with the next generation of platform technology would not only reduce costs and risks for companies, but facilitate innovation in the financial markets.

Read more: BlockchainAGMUniversity of WollongongAlex Frino
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