Study On Chinese Listed Companies’ Sharc Repufchase Metive And Market Reaction To The Share Repurchase Announcenlent

Share repurchase has existed for a long time in the western developed capital market, and it has become a kind of usual interest distribution policy and capital management mode. Different from the western capital market, Share repurchase only has a short history in our country. If the mature share repurchase theory of the western capital market is suitable to China still needs for testing. In China, only a few listed companies have bought back their shares. In such a situation, Chinese scholars mainly do theoretical research on the share repurchase. And some scholars do case study on it. But there are only a few empirical researches. So testing the applicability of the mature share repurchase theory and the market reaction to the share repurchase announcement in our country has vital significance for our country’s share repurchase practice, which is in the preliminary stage of the development.The lack of empirical research leads to the lack of empirical support for our country’s research results of the share repurchase. This article uses multiple regression analysis to study the motive of Chinese share repurchase and uses event study methodology to study the market reaction to the share repurchase announcement. Compared with the qualitative analysis in most domestic articles, using empirical analysis makes this article have certain innovation. And using the79share repurchase announcements released from June16,2005to August31,2011as the initial study samples is more persuasive in the sample size than the few empirical researches done previously in china.The research results of the motive of domestic share repurchase show that the signaling hypothesis has good explanation strength in our country, but the free cash flow hypothesis, the leverage hypothesis and the financial flexibility hypothesis may not explain the motive of domestic share repurchase up to now. The research results of the market reaction to domestic share repurchase announcements show that the announcements have a positive market reaction on the announcement day. The results also show that the announcement information has been revealed ahead of time because there is positive market reaction on the day before the announcement day. The separate analysis on the market reaction to the non-tradable share repurchase announcements and tradable share repurchase announcements shows that both kinds of the announcements have a positive market reaction on the announcement day, but the market reaction to the non-tradable share repurchase announcement is more positive than the market reaction to the tradable share repurchase announcements.