An Empirical Study On The Timing Of Repurchase Transactions And Its Influencing Factors In China

Stock repurchase is an important dividend policy for listed companies,and it is also a means of stabilizing its share price and raising market capitalization.The literature which focus on the repurchase transactions in China has mainly emphasis the motivation and market reaction of repurchase.However,the research on the existence of repurchase and the influencing factors of the company's timing ability is still in the preliminary stage.Based on the theory of market timing and the theory of principal-agent in the background of information asymmetry,this paper analyzes and judges the timing of the stock repurchase of listed companies and the factors which affect the company 's timing ability.This paper selects listed companies in China's A-share market from 2005 to 2016 as the research sample.Through the Wilcoxon's Sign Rank Test,it can find out that the negative rank of the difference between the repurchase price and the market benchmark price is more than the positive rank.On this basis,the Tobit model and the Carhart four-factor model were used to observe the changes in the yield of listed companies before and after the repurchase announcement.The results suggest that the repurchase ratio of the repurchase month and the market-adjusted stock yield of the two months before the repurchase were significantly negative correlated,and companies appear to time their repurchases by purchasing own stock after abnormal pricedeclines and before abnormal price increases.This proves that there is timing behavior in stock repurchase in China's capital market.F urthermore,this studyestimates the influencing factors of the company's timing ability,and finds that the ownership structure of the company,the nature of the controlling shareholder and the stock liquidity have significant impacts on the market timing ability of the repurchase:(1)Institutional ownership reduces companies' opportunities to repurchase stock at bargain prices.(2)State-owned enterprises have lower timing ability than private enterprises.(3)Increased liquidity in the stock can reduce the cost from timing OMRs.The conclusion of this paper provides some empirical evidence for the time choice of the open market repurchase of listed companies in China.In order to avoid the problem ofinformation asymmetry,the supervisory authority should further regulate the stock repurchase transactions of listed companies.On the other hand,stock repurchase,as one of the diversified dividend policies,can enhance investor's confidence and promote a reasonable return from the company's stock market price to the long-term intrinsic value,providing more channels for the market value management of listed companies as well.