E-commerce giant Alibaba maintains confidence in accounting practices amid US regulatory probe

With the reputation and shares of the company under siege, Alibaba Group executive vice-chairman Joseph Tsai yesterday took the high ground and expressed confidence in the firm’s accounting practices, which are being investigated by the United States Securities and Exchange Commission (SEC).

New York-listed Alibaba, the world’s largest e-commerce services company, saw its share price fall 6.8 per cent to US$75.59 in US trading on Wednesday -- its steepest drop since January -- on news of the SEC probe that the company disclosed in its regulatory filing this week.

“Overnight, the market did not react well in what I believe to be an overreaction to headline news,” Tsai told the South China Morning Post, which the Hangzhou-based company owns.

In its 20-F filing on Tuesday in the US, Alibaba said the SEC informed it was initiating an investigation into whether there have been any violations of the federal securities laws.

Alibaba was requested to voluntarily provide the SEC with documents and information relating to: consolidation policies and practices, including accounting for Cainiao Network as a so-called equity method investee; its policies and practices applicable to related party transactions in general; and reporting of operating data from China’s “Singles Day”, the world’s biggest online shopping festival held every November 11.

“On the substantive topics in the SEC inquiry, we are confident of our accounting for consolidation, and of our robust and transparent disclosures in our 20-F and March quarterly earnings about major equity-method investees, such as Cainiao and Koubei, as well as related party transactions,” Tsai said.