The View | Can Alibaba overcome the 'China syndrome' with its US IPO?
Accounting challenges create problems and opportunities for American investors wanting to buy into China growth story via Alibaba IPO
The ghosts of Enron and Arthur Andersen are rising from their graves to greet Alibaba and PwC.
Let's assume that there exists a price for the e-commerce giant's initial public offering where you can compromise on corporate governance and reliable accounts in order to buy into another China growth story.
But that would still only make sense if investors could depend on Alibaba's audited financial statements at the time of listing and in the future.
Unfortunately, the history of recent Chinese listings in the United States is a horror show of fraudulent accounting. Alibaba's partners' campaign for complete control of the board of directors is so uncompromising that they might as well eliminate the annual general meeting of shareholders.
An IPO usually requires a clean or unqualified audit, which represents what auditors call a "fair and true" view of the company's accounts.
The mainland affiliates of the Big Four global accounting firms have been charged and suspended by a US judge for refusing to cooperate with US Securities and Exchanges Commission subpoenas.