Alibaba Governance Structure

Stock market plays an important role in the development of entire economy. According to Levine and Zervos , The stock market can give a big boost to economic growth and make a great impact in economic activities by providing liquidity. Many profitable investments require a long-term commitment of capital, however at the same time, most investors are often reluctant to have other people in control of their own savings in long term in considering the risk of the investments. The creation of liquidity by stock market relieves this dilemma since it makes those investments less risky and more attractive. The existence of liquid stock market enables investors to acquire and sell their stocks and change their portfolio quickly and cheaply. To companies,
As mentioned above, due to the centralized power, the central management of Alibaba maintained its initial corporate culture which is the key cohesive force in enterprise, ensuring that every decision would not deviate from the company’s target and that strategies are for its long-term performance. However, due to this unique structure and the company’s election procedure, the independence of management of board of director cannot be guaranteed and the interests and rights of public shareholder might not be protected. In conclusion, the governance structure of Alibaba group is overall good. The management of company put more emphasis on the companies’ long term behavior because they are influenced by the same powerful corporate values and share the same business objective. Better quality product and services are expected to be provided by the company and stock price is expected to increase, therefore shareholder’s wealth will increase and a stable employment environment can be guaranteed. However, to achieve these objective, actions should be taken to avoid potential information asymmetry and insider trading, and interest of minority investors should not be