Understanding platform market value through decentralization governance — An integrative model from signaling and mechanism design theory

Abstract

Although previous research has provided insights into the direct effects of platform decentralization governance on market value, scholars have failed to theorize and empirically examine the mediating mechanisms through which platform decentralization governance transfers into increased or decreased market value. This article draws on signaling (Spence, 1973) and mechanism design theory (Hurwicz, 1973) to provide a theoretical understanding of how voluntary disclosures and developers' activities mediate the relationship between platform decentralization and market value. We test our model with a sample of 682 largest market capitalization blockchain platforms. The results confirm our proposed mediation relationships that (1) centralization (or low decentralization) governance enhances platform market value via more voluntary disclosures, (2) decentralization enhances platform market value via facilitating developers' activities, and (3) centralization enhances market value via more voluntary disclosures that in turn facilitate developers' activities. Overall, our study offers both theoretical and practical implications regarding the governance structures that drive value for digital and blockchain platforms.