The Stock Repurchase Of The Influence Of The Share Price Behavior

Stock Repurchase appeared long time ago. It has been existed almost hundred of years, but its real development began at the end of the60’s of20th century. At that time, international oil priced high, The United States economy was in a state of stagflation, the U.S. Government took controls on cash dividend distribution to get out of the predicament, so the company’s management staff chose the stock repurchase instead of cash dividend distribution. Stock repurchase can also be used to improve the company’s share price and reverse the hostile takeover.Although the Stock Repurchase has been widely used by western developed countries for a long time, in our country it has just started. The first stock repurchase case in our country appeared in1992——Xiaoyu garden merged into Dayu garden event. After more than ten years rarely appears repurchase cases. Until June2005, China securities regulatory commission issued Listing Corporation repurchase of public shares management (for Trial Implementation), this just opened the gate of Stock Repurchase, since then a large number of Stock Repurchase cases appeared. But most of these cases are accompanied by the share-trading reform, Mainly for the state-owned legal person shares, not for public. On October9,2008, securities regulatory commission formally issued The supplementary provisions about repurchase shares by means of centralized bidding, this regulations appearing in our country showed an actively attitude on the Stock Repurchase. After the laws and regulations, a large number of Listing Corporations repurchased stocks, but because of the rare number of the domestic stock repurchase, papers about the influence on stock prices by Stock Repurchase are few, so these Listing Corporations are not sure about what kind of effect Stock Repurchase can bring in China. This paper will use the measurement method to measure the influence on the degree of the company’s share price by Stock Repurchase behavior in China, and determine whether the Stock Repurchase behavior has significantly positive effect to company’s share price. The result not only can enrich Chinese stock repurchase literature, but also will provide some references for Listing Corporations, so this paper can be certainly significant.This essay focuses on the share’s repurchase case as the sample which happens in A shares public company all over the country. It not only evaluates the public company’s profits by marketing model calculation, but also does the non-parametric test which is promoted by Corrado, according to the unusual return rate. As per the consequence to make sure if the repurchasing behavior has a positive affection on company’s share. Certainly, as to the practical results, the conclusions as follows:1. Release the stock repurchases announcement significantly positive effect on the share price of the listed companies. Observed in this article, the stock repurchase announcement will be released the company does not appear significant fluctuations in share price before the announcement, the share price has been in a stable state, Until the day before of Announcement date the company’s share price will appear forward fluctuate,this phenomenon will continue until the announcement day, followed by abnormal yield decreases rapidly even reached negative, but in general, after the announcement cumulative average abnormal returns are positive. Through this article that positive abnormal returns significant test learned announcement day abnormal returns are positive significant, but announcement day abnormal yields are not significant, cumulative average abnormal returns in the period (+11,+14) is positive and significant ground, which also shows that the stock repurchase behavior of the company’s share price has a significant positive impact.2. Insider trading behavior may exist in China’s stock market. The empirical results show that, on the day prior to the announcement average abnormal returns of listed companies in China is significantly positive and the reaction became rapidly smaller at the day before the announcement date, the average abnormal returns of listed companies is positive on the day of the announcement date, but not significant, after that day, average abnormal returns of listed companies is significantly negative. Above all, we indicate that internal trading behavior exists in China’s stock market, and the staffs in the listed company use their information advantage to obtain benefits.3. It is possible that institutional investors monetize the stock hold by them on the occasion of stock repurchase. The empirical results showed that, after the stock repurchase announcement by the company, the company’s cumulative average abnormal rate of return turned out to be positive, that was, the stock repurchase has brought the investors who originally holding the stock profits. The cumulative abnormal returns of listed companies in the period (+11,+14) was significantly positive, but it then began to decline, moreover, the cumulative abnormal returns on the (+17) day turned to negative, this phenomenon showed that there were a large number of investors selling the company stock hold by them, and it was difficult for ordinary investors to complete such a significant impact, so there might be institutional investors who monetized the stock hold by them on the occasion of stock repurchase.4. It needs improvement on the laws about our country’s Share Repurchase, because our public company’s majority shareholders are few. When we decide to repurchase shares, it’s difficult to take the minority shareholders into consideration. We always sacrifice our minority shareholders’ profits to achieve majority shareholders’profits. So, the social public investors’ profits are more guaranteed. The unbalance of information can not make the social public investor earn their returns. Owing to this phenomenon, our country should take steps to improve the law, which is related to repurchase shares. Of course, we should promote some practicable measures to make the laws be easily operated. Don’t just focus on some principle rules and regulations.