Borrowing Aggressive And Finance Its Growth Against The Capital Invested By The Owners

982 WordsOct 28, 20154 Pages
borrowing aggressive to finance its growth against the capital invested by the owners. It is crucial to consider the ability the company to overcome this situation when its debt load is relatively higher than its yearly income. Challenge 3: Share price reaction in the stock market to IPO under-pricing Nowadays, the prestige of the New York Stock Exchange (NYSE) is clearly attracting a large number of Chinese companies. Commonly, firms such as Alibaba seek to launch initial public offers (IPO) in foreign markets raising the capital that the firm needs to expand its businesses across the globe. Nevertheless, to deal with stock market reactions after an strong debut represents a great challenge for large corporations. Spinal (2014) states that “buying the shares of fundamentally strong companies soon after they hit the public market is fraught with the risk of short-term losses for retail investors”. Certainly, IPO initial returns are profitable, but it is important to consider the dramatically fluctuation that it may face due to volatility and high information asymmetry. Challenge 4: The global e-commerce competition Alibaba.com clearly dominates the Chinese e-commerce accounting billion transactions in the recent years. Through its English-language wholesale platform, the company supports the global trade by using a business-to-business model (B2B). The firm incursions into the U.S. market in a time when global e-commerce is absolutely competitive and unprecedented (Clifford,

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