Impact of dual-class share structure: Alibaba IPO success analysis

Abstract

ABSTRACT In September 2014, Alibaba went public in the United States through the largest IPO (initial public offering) in history, raising $21.8 billion and elevating the company’s value to $218.7 billion. The successful listing of Alibaba, the world’s largest online and mobile commerce enterprise, has attracted a lot of attention to investment strategy; in particular, the dual-class share structure of Internet enterprises designed to protect the control rights of company founders and the promotion of enterprise IPO have become a focus for international scholars. Based on the IPO case of Alibaba Group, this paper studies the dual share system of Alibaba with regards to three aspects: theoretical analysis, case analysis and financial index analysis. First, it introduces the literature relevant to the dual share system. It then takes Alibaba as a case study in order to analyse the reasons for the success of its IPO, and studies the impact of the dual share system on this IPO. Finally, it analyzes the effect and influence of the dual share system on IPO with regards to four dimensions of financial performance. Through the discussion in this paper, we hope to provide better ideas and suggestions for companies planning an external IPO.