Founder Firms and Bad Corporate Governance Design? The Case of Alibaba

20 Pages Posted: 26 Nov 2014 Last revised: 24 Mar 2015

See all articles by Stefan Petry

Stefan Petry

University of Manchester - Alliance Manchester Business School

Date Written: November 24, 2014

Abstract

The IPO of Alibaba was the biggest IPO on record. However, outside shareholders who invest in Alibaba will have little say in how the company is actually run. The firm has put in place a number of mechanisms that make it deviate from the principles of good corporate governance. This paper uses the Alibaba IPO as a case study to expose the corporate governance features of founder-led high-tech firms. Many of these types of firms seem to choose governance structures that entrench incumbent executives and limit shareholders' power. I discuss in detail Alibaba's most striking governance weaknesses, draw comparisons to other U.S. firms with similar governance structures, and put it in the context of the wider academic literature concerning this topic.

Keywords: Alibaba, Founder, Corporate governance, IPO

JEL Classification: G3, G30, G34

Suggested Citation

Petry, Stefan, Founder Firms and Bad Corporate Governance Design? The Case of Alibaba (November 24, 2014). FIRN Research Paper No. 2530063, Available at SSRN: https://ssrn.com/abstract=2530063 or http://dx.doi.org/10.2139/ssrn.2530063

Stefan Petry (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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