The Research On The Motivation And Effect Caused By Stock Repurchase Of Manufacturing Listed Companies In China

Stock repurchase is a method that listed companies use to repurchase its issued shares in a limited price and proportion, by means of using its own accumulated capital or on loan. The repurchased stocks is stocked or be destructed. The capital market behavior is used for the reduction of capital or adjustment of capital structure. Stock repurchase origins from America. In 1973, the government of America promulgated a series of limited polices about dividend. To avoid the policy limit, listed companies by using stock repurchase in change of cash dividend.As a positive financial management, the theories of stock repurchase in mature capital countries like America is well developed, and the method is widely used. For the special conditions in our country, stock repurchase is developed late and slowly. For a long time, the motivation of stock repurchase is quite different from developed countries. Stock repurchase is not used well in our country as an important tool of market adjustment.To explore the current situation of stock repurchase in our country, and to give guidance to stock repurchase system in our country, I take motivation as the breakthrough point, the stock repurchase cases of listed companies in manufacturing industry as samples, make an analysis of effect of stock repurchase. I make a comparison between China and western developed countries about stock repurchase motivation and effect it provides, to find shortages in the area of stock repurchase in our country, and put forward my own analysis and advise.In the paper, I use literature research, comparative analysis, quantitative analysis and summary regression analysis as the main research method. First I describes the relevant theoretical knowledge of stock repurchase, including the development of stock repurchase, concept of repurchase, classification of repurchase, the stock repurchase and theories on the stock repurchase motivation and effects. Then I make an empirical analysis on the motivation of stock repurchase of manufacturing industry listing companies in China. I find that with the complete of the share trading reform, the motivation gradually changes from the administrative function to the functions of market. After the comparison with other countries, I find that there are some differences of the motivation between China with other countries.The market announcement effects with different motivations are different. Finally through the wealth effect model of the wealth effect of stock repurchase, I found that the wealth effect of Chinese stock is much smaller than the western developed countries, stock repurchase did not play due effect. The main reasons for this result is mainly market participation is not enough, the repurchase price, the proportion of repurchase and capital premium due to low.