A Positive Research On Share Repurchases Motivation And Effect Of The Listed Company In China

As a financial innovation tool, share repurchase having been a kind of usual interest distribution policy and capital management mode for more than half a century in western counties. Despite starting late, share repurchase in China grows apace along with the development of standard securities market and system perfection. Therefore, it is significance for both theory and practice to figure out motivation and effect of share repurchase with quantitative method under background of shareholder structure reform and the coming full circulation age.This thesis uses share repurchases theory, positive accounting theory and corporate governance theory to do a positive research on share repurchases motivation and effect of listed company in China by following logistic steps: establishing research hypothesis, selecting standard sample, designing variables, building models, analyzing empirical results and giving policy suggestions. We test share repurchase motivation and effect as well as influencing factors through three multiple linear regression models. Results show that on the one hand signaling hypothesis, excess capital hypothesis and financial leverage hypothesis could explain Chinese repurchases motivation; while on the other hand guaranteeing stock structure reform and solving fund occupation by controlling shareholders become new motivation with Chinese characteristics. Furthermore, our results provide corroborative and positive evidence for Chinese market response to share repurchase announcement in short time, which affected by repurchase ratio, competitors amount in same industry, payout ratio and price / earning Ratio. Corporate performance will be better after implementing share repurchase and influenced by liability asset ratio, price to book ratio, repurchase money amount, total assets and competitors amount in same industry. Then we put forward proposals including specification disclosure procedures and format, perfecting supporting institutions, pay close attention to interactions among motivations, new features of share repurchases recently and competition in same industry. In addition, we also focus on paying ability changes after share repurchase.