A STUDY ON THE DEBT FINANCING BEHAVIOURS OF TOP 7 E-COMMERCE COMPANIES OF THE WORLD IN THE CONTEXT OF THE CAPITAL STRUCTURE THEORIES

All other firms except Amazon are following the Pecking order theory. So the firms are in an environment of information asymmetry assumed by Pecking order theory. Also all firms are having a higher percentage of Long Term Debt in their Total Debt. This shows the lesser reliance on short term debt by the firms. So the less reliance on Long term debt for high growth firms, usually followed by high growth firms is not present in the 6 e-commerce companies except JD.com. Also high percentage of long term debt shows the higher bargaining power of the shareholders over the bondholders. So the higher bargaining power will lead to the higher agency costs and lesser investment opportunity set which are the decreased chances of investing in higher return projects. This may affect the value of firm in the future. Also it shows the better strategic positioning of Alibaba.com in the context of less Long term Debt to Equity, Long term Debt to Capital and positive earnings per share. Amazon may face higher risk of liquidity than Alibaba if it faces fluctuations in earnings per share, due to a higher Long term debt to Equity and Long Term Debt to Capital ratios than Alibaba. Also the bankrupt chances for Groupon.com are higher than the other firms. The bankruptcy chances for EBay are much higher than the Amazon.com. The analysis is in the context of the ratios Long term Debt to Total Capital, Long term Debt to Equity and the Price to Earnings Ratio. The firm Shopify.com is assumed to be in the initial stages of financing since Total Debt and, Long Term debt is not evident. It is assumed to rely on the internal methods of financing