Research On Equity Agency Costs Under The Dual-class Share Structure Of Alibaba

In 2014,Alibaba was listed on the New York Stock Exchange of the United States on September 19 after it was rejected by the Hong Kong Stock Exchange that its Partnership did not meet the listing requirements.Alibaba's Partners have firmly controlled the listed company by obtaining the right to nominate and designate the board of directors.In fact,its Partnership is the dual-class share structure.By reviewing the research on the dual-class share structure and the equity agency costs in the dual-class share structure,this paper finds that this kind of ownership structure separates the equity(the cash flow rights)from the voting rights.On the one hand,it can enable the high-voting shareholders to control the company with less equity,be free from short-term market pressures,prevent hostile takeovers,focus on long-term goals,and facilitate investment in individual human resources;on the other hand,it also weakens the external supervision and increases the incentives of high-voting shareholders to take private interests,which is not conducive to protect the interests low-voting shareholders and easy to generate high equity agency costs.So,It is a double-edged sword.Many scholars have found that the equity agency costs of the dual-class share structure company is relatively high through empirical evidence,but only a few identified the dual roles of managers holding high-voting shares in the research process,which resulted in the failure to describe the equity agency costs of the dual-class share structure company fully and accurately.Therefore,this paper analyzes the agency costs in the dual-class share structure through agency theory,economic man theory and asymmetric information theory,and argues that there are mainly two kinds of agency relationship in the equity agency problem in the dual-class share structure,which is the agency relationship between managers and shareholders and the agency relationship between low-voting and high-voting shareholders.The degree of deviation of ownership and voting rights between the principals and agents increases,with the effects of economic man and asymmetric information,the objective functions of them are different,leading the increases of motivation for the agent to seek private interest,and resulting in higher equity agency costs.Therefore,in the viewpoint of two kinds of the agency relationship,this paper analyzes Alibaba's equity agency costs by examining the first kind of agency costs between shareholders and managers and the second kind agency costs between low-voting and high-voting shareholders through the case of Alibaba.After a detailed analysis of Alibaba's dual-class share structure,the contents of Alibaba's two kinds of equity agency costs are found out by the analysis of theories,and the research reasoning is gotten,so that Alibaba's first kind of agency costs calculations are analyzed based on the management expense rate and total assets turnover rate,and the second kind of agency costs calculations are analyzed based on the dividend payout rate and the level of free cash flow.By comparing with single-class share structure companies in the same industry and the benchmarking company Amazon,it was found that Alibaba's two kinds of equity agency costs are at a relatively high level.This article summarizes the characteristics of Alibaba's dual-class share structure,reveals the condition of Alibaba's equity agency costs,provides a theoretical basis for corporate governance and policy formulation,enriches the case base for equity agency costs research of the dual-class share structure,and also put forward some new ideas for the study of equity agency costs.