Alibaba: A Case Study of Synthetic Control

Alibaba: A Case Study of Synthetic Control

Jesse Fried, Ehud Kamar

Series number :

Serial Number: 

Date posted :

August 05 2020

Last revised :

February 23 2021
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  • Alibaba • 
  • Ant Group • 
  • China • 
  • Controlled Firms • 
  • controlling shareholder • 
  • corporate control • 
  • VIEs • 
  • Corporate governance

Alibaba, the NYSE-traded Chinese ecommerce giant, is currently valued at over $700 billion. But Alibaba’s governance is opaque, obscuring who controls the firm. We show that Jack Ma, who now owns only about 5%, can effectively control Alibaba by controlling an entirely different firm: Ant Group. We demonstrate how control of Ant Group enables Ma to dominate Alibaba’s board.

We also explain how this control gives Ma the indirect ability to disable (and perhaps seize) VIE-held licenses critical to Alibaba, providing him with substantial additional leverage. Alibaba is a case study of how corporate control can be created synthetically with little or no equity ownership via a web of employment and contractual arrangements.

Published in

Published in: 
Publication Title: 
Harvard Business Law Review, Forthcoming