JD.com has seen its share prices divebomb after its chief executive Richard Liu was accused of sexual misconduct and arrested in the US.
Last week Liu was arrested in Minneapolis and held for 16 hours as police launched an investigation into alleged sexual misconduct, before being released without charge.
Though both Liu and his lawyers deny any wrongdoing, shareholders have panicked, and the technology giant’s share prices have dropped 16 per cent wiping an estimated $7.2 billion (£5.5 billion) off its value.
One of the main concerns for shareholders is the intense level of control Liu holds over the company, meaning that the board cannot make any decisions without him present, even if he is in jail.
He is also understood to own roughly 16 per cent of the company, but holds about 80 per cent of the votes alongside a provision which stops the board making any decisions unless he is present while he is a director.
This has raised concerns about governance at the JD.com, one of China’s most powerful companies, while Liu is embroiled in controversy.
JD.com has said police “quickly determined” the allegations held no weight, and Liu’s lawyers are reportedly not expecting any charges to follow, despite the investigation continuing.
Last month JD.com fell back into red, reporting a loss of $334.4 million (£262.8 million) for the three months since April, nearly double the $177 million loss Reuters’ analysts predicted.
This is not the first time in this year the company has swung to a loss, and reportedly reflects significant investments in technology as it battles with its smaller rival Alibaba, alongside slowing sales.