The Impact Of Open Market Share Repurchase On Capital Market Information Efficiency And Stability

Open market share repurchase refers to the behavior of a listed company to repurchase its own shares from the stock market for the purpose of stabilizing stock price,improving governance structure,mergers and acquisitions,etc.The share repurchase of listed companies originated in the United States in the 1950 s and was promoted in the 1970 s.However,due to the strict restrictions in my country’s "Company Law",the share repurchase market is not active.The Standing Committee of the 13 th National People’s Congress amended the "Company Law",relaxed restrictions on share repurchase,simplified the process of share repurchase,broadened the source of funds for share repurchase,and gave full play to the confidence of the share repurchase to stabilize the market.function.With the revision of the share repurchase policy,the overall scale of share repurchase by listed companies in my country has doubled.According to the statistics of the Choice database,between 2010 and 2017,my country’s listed companies issued a total of 444 announcements on the implementation of open market share repurchase,and from 2018 to 2019,my country’s listed companies issued a total of 4,232 announcements on the implementation of open market share repurchase.The sudden increase in the stock repurchase behavior of listed companies in the open market has caused an impact on the capital market,which is a topic worthy of in-depth study.Therefore,this paper will start with market reaction,market information efficiency,stock price volatility and crash risk to analyze the impact of listed companies’ open market share repurchase behavior on the capital market.Specifically,it includes the following aspects:First,this paper analyzes the market effect of listed companies’ share repurchase behavior.Since the amendment of the "Company Law" in 2018,the number of public share repurchase announcements of listed companies has increased sharply.Therefore,the event study method is used to analyze the market effect brought by the current public market share repurchase behavior of listed companies.Purchases affect the fundamentals of capital markets.Secondly,this paper analyzes the impact of public market share repurchase of listed companies on the information efficiency of the capital market.Active disclosure of listed companies is the main channel for investors to obtain information.Managers with internal information can control the transmission of information to the market through various mechanisms.Share repurchase is one of the important means for listed companies to carry out information disclosure,and discussing the relationship between share repurchase and the synchronicity of stock price is helpful to judge whether share repurchase can improve the efficiency of market information.Finally,preventing and defusing systemic financial risks and maintaining financial stability are the fundamental requirements of current financial work.The regulatory authorities hope to stabilize market confidence through the share repurchase of listed companies.Therefore,this paper analyzes the impact of public market share repurchase of listed companies on stock price volatility and crash risk to verify the effectiveness of share repurchase in stabilizing the market.The specific research conclusions are detailed as follows:First,the stock returns of listed companies that carry out share repurchase have shown significant positive excess returns before the repurchase announcement,which reflects that there is indeed an early leak of repurchase information in my country’s share repurchase market.On the announcement day of share repurchase,market participants will respond to the announcement,bringing positive excess return.However,with the gradual reception of information,the average excess return quickly falls after the announcement day,while CAR is on the announcement day after the announcement.After reaching the highest value for 2days,there is no longer an upward trend.It shows that the attitude of market participants towards the repurchase announcement has gradually become more rational,and began to analyze the motivation of management to carry out the share repurchase,as well as the authenticity of the share repurchase,which led to a cooling of the market,so the stock price showed a downward trend.Adjustment,the company’s share price also fell after the growth.Second,the public market share repurchase of listed companies and the information efficiency of the capital market.The study found that the public market share repurchase behavior of listed companies effectively reduced the synchronization of stock prices and effectively improved the information efficiency of the capital market.Specifically,the public market share repurchase behavior of listed companies has mainly achieved the improvement of capital market information efficiency through two channels: enhancing liquidity and improving the market environment.Further research found that,on the one hand,the amendments to the Company Law in 2018 significantly increased the positive impact of share repurchase on the information efficiency of the capital market and improved the capital market environment;on the other hand,under different market conditions,a bear market The behavior of share repurchase can effectively improve the information efficiency of the capital market.Conclusion Supporting China’s policy of improving the basic system of the capital market and market-based supervision will help improve the efficiency of the capital market.Third,the public market share repurchase of listed companies and stock price fluctuations.The research results show that the behavior of listed companies to repurchase shares in the open market can significantly reduce the volatility and amplitude of stock prices,and effectively improve the stability of stock prices.Share repurchases are mainly used to boost investor confidence,which in turn promotes stock price stability.Further research found that compared with the bull market,the share repurchase has a more significant effect on stock price stability in the bear market.Compared with state-owned enterprises,the repurchase of shares by private enterprises can significantly reduce stock price fluctuations.By decomposing the stock price volatility,it is found that the effect of repurchasing shares in stabilizing stock prices is mainly reflected in reducing the heterogeneous volatility of stock prices.Forth,the risk of listed companies’ open market share repurchase and stock price collapse.This thesis takes the stocks of all A-share listed companies from 2014 to 2019 as the research object,and examines the impact of stock repurchase on the risk of stock price collapse.The research results show that the positive signal of stock repurchase to the market is greater than the negative signal,and the listed company is public.The market share repurchase behavior can effectively reduce the risk of a company’s future stock price collapse.In the robustness analysis,the thesis also changes the explanatory variables,controls the impact of the stock market crash,and adjusts the time window.The research finds that the results are still significant.In the analysis of the impact mechanism,the study found that the stock repurchase of listed companies can reduce the risk of stock price collapse by providing liquidity,alleviating the liquidity crisis.Further research on the mechanism found that in the high concentration,overvalued and non-state-owned samples,stock repurchase has a stronger inhibitory effect on the risk of stock price collapse.The research in the thesis has important practical significance for promoting the stable and healthy development of listing and preventing systemic financial risks.Compared with the existing research,the thesis mainly makes the following contributions,in order to provide ideas for in-depth study of the capital market.First,it enriches the literature on the impact of share repurchases on capital markets.At present,the research on the economic consequences of share repurchase in my country focuses on market effects,financial effects,boosting stock prices,etc.,while there are few studies from the perspective of capital market efficiency and stability.This paper uses the information efficiency and stability indicators of the capital market(information efficiency indicators,stock price stability indicators,and crash risk indicators)to analyze how the public market share repurchase behavior of listed companies affects the capital market,which can enrich the research content of share repurchase and broaden the research on share repurchase.The idea is to provide empirical evidence for share repurchase to give full play to the signal role,boost market confidence and promote the stable and healthy development of the capital market.Second,an in-depth discussion of the environment and channels through which listed companies’ open market share repurchase behavior affects the capital market will help deepen investors’ understanding of share repurchase,and at the same time,it will also provide regulatory authorities with a better understanding of the open market share repurchase of listed companies.Purchase management to provide ideas.On the one hand,the thesis starts from the mechanism,and analyzes the channels through which the public market share repurchase behavior of listed companies affects the capital market;environment of.Third,the identification of false repurchases expands the research ideas related to share repurchase.Most of the existing research shows that there may be false repurchase in the open market share repurchase of listed companies,mainly because executives may propose share repurchase for self-interest,raising the stock price to facilitate their own reduction of shares.However,research is usually conducted from a case perspective,lacking empirical evidence from an empirical perspective.From the perspective of mispricing and stock price valuation,the thesis discusses the market reaction when the share repurchase does not truly reflect the undervaluation of the company’s stock price.Behavior has an accurate identification.