A Research On The Share Repurchases Of The Public Companies:Determinants And Managerial Responses

Share repurchases have achieved great favors from the listed companies and investors in the western capital market, as a kind of capital withdraw mechanism and value distribution method. Scholars have done a lot of research on share repurchases and the achievements are abundant, especially about the repurchase motivates and market reactions. In the domestic capital market, more and more public companies attempted to repurchase shares, especially in the open market, to feedback the shareholders or to stimulate the share price and so on with the production of the laws and regulations. Up to Aug31st in2013, the total number of open market share repurchases in China reached42, and the number of the announced target shares amounted to approximately6.6billion and the total value approximately￥24.1billion.In this dissertation, we summarized the inherent characteristics, determinants and managerial responses of share repurchase in China using both theoretical analysis and empirical research, as focusing on the38open market share repurchases during2005-2013. What’s more, we also take the "managerial overconfidence" into consideration and find out the relationship between share repurchases and managerial overconfidence. This dissertation includes five parts. Firstly, we introduced the dissertation. Secondly, we summarized the existing research reviews about the determinants and managerial responses at home and abroad, and find out the core content. Thirdly, we did an empirical research on the determinants of share repurchases from two aspects:corporate finance and corporate governance, and the results show that operating results, dividend payment, the amount of the cash and ownership structure can affect the announcement of share repurchases of the listed companies. Fourthly, we studied that how the managers respond to the market reaction, and we found out that the market reactions can affect the short-term actual repurchases while the share price and the amount of the cash can affect the long-term actual repurchases. In the end, we made conclusions that, in essence, the share repurchases of the Chinese public companies are:a kind of method to feedback the shareholders and supplement dividend while the listed companies have good performance and enough cash; a kind of tool to convey information to stimulate and promote share price while low as the flexibility of open market share repurchase; a kind of way to strengthen self-management and reduce agency cost with the supervisions from both capital market and shareholders. Moreover, the irrational factor, managerial overconfidence is also the determinant of share repurchase, which results that the managers tend to repurchase more shares in the short term to improve share price, while they tend to repurchase less shares to retain funds in the long term.