Analysis On The Medium And Long Term Effect Of Stock Repurchasing To Trend Of The Share Price Of Listed Companies

Stock repurchase originated in the USA, now has become an important mean forcapital operation for listed companies in Western mature securities market and Annualturnover is more than one hundred billion U.S. dollars. In china, however, due to latestart securities market, immature market economy, stock repurchase events is less,scale is not large and it is in the preliminary stage of development. However, with thedevelopment of Chinese economy, stock buyback cases increased significantly andcaused more and more academics to pay attention to stock repurchase and relatedsubjects. This paper aims to study the stock repurchase’s influence on medium andlong term stock price of Chinese listed companies by analyzing the case of stockrepurchase events.The paper uses event study methodology, the study of China’s listed companiesstock price changes in a certain period of time after the stock repurchaseannouncement, in order to determine the extent of the reaction of the stock market forthat type of event. This paper introduces the extraordinary rate of return model,academia abnormal return; the usual indicators (CAR) to measure the market effectsof stock repurchase announcements of listed companies. Through this model, we canunderstand the relationship of stock price fluctuations in the incident.The article focuses on the empirical analysis of the buy-back event. Carefullyselected40stock repurchase sampleswhich happed during June17,2005to31December2010in ChinaA-share market. In the comprehensive consideration ofthepractices of foreign scholars and domestic investors’ investment habits, andreferringto The practical significance of the study,to determine the long-term timewindow of180trading days after the repurchase announcement date and360tradingdays. In this paper, a lot of statistics and analysis on the basis of the samplepopulation of180trading days after the repurchase announcement and to therepurchase announcement within360trading days in the future the averagecumulative abnormal returns rate is positive, indicating that China’s stock market,stock the buy-back events on stock prices and long-term trend there are obvious positive effects.Finally, on the basis of the various factors affecting the analysis of theeffects of stock repurchase market, combined with the existing problems in China’sstock repurchase, put forward a proposal to strengthen the construction of China’srepo market.