How Does Token Holder Governance Affect the Security Token’s Cash Flow?

Token holder governance in a security token context allows holders to vote on key economic decisions, such as the distribution of profits (dividends), fee structure changes, or treasury management. This ability to influence cash flow distribution can increase the token's perceived value.

However, it also introduces governance risk, where a majority of holders could vote to divert cash flows in a way that is detrimental to minority holders, which must be accounted for in the risk assessment.