Analysis Of The Economic Effect Of Joyson Electronic's Stock Repurchase

In 2018,the China Securities Regulatory Commission revised the rules to relaxed the restrictions on stock repurchase on China's stock repurchase,and coupled with the decline in the stock market caused by the Sino-US trade war,many companies have chosed stockrepurchasing.As a result,China 's A-share market saw a wave of stock repurchases in 2018,and Joyson Electronics is one of them.Joyson Electronics is a company whose main business is auto parts manufacturing.After 2017,the global automobile market sales were sluggish.Joyson Electronics also performed badly in the A-share market,so it hoped to boost it through stock repurchase.The stock price enhances investor confidence.On June 13,2018,Joyson Electronics issued a stock repurchase announcement.Joyson completed the stock repurchase by 11 repurchases and finished on November 24,2018.The total amount of this repurchase reached 1.801 billion yuan,accounting for the total 7.58% of the capital,because of its large repurchase amount and a high proportion of the total share capital,it is representative of the 2018 stock repurchases.This article takes Joyson Electronics 'stock repurchase as a case study object,and uses case study method,event study method,and comparative study method to analyze the background,motivations,and economic effects of Joyson Electronics' repurchase to obtain relevant information.Conclusion and enlightenment,and then put forward related suggestions.In the analysis of the motivations of the case of Joyson Electronic's stock repurchase,this article finds that the reason for Joyson Electronic's repurchase is mainly because of the poor performance of Joyson Electronics' stock price,but the business operators are full of confidence in the company and believe that the stock price cannot be reflected The value of the company,in order to protect the interests of investors,send a positive signal to the market,and the company's free cash flow is sufficient,also provides conditions for the implementation of stock repurchases.In the market effect analysis,on the one hand,in the short term,that is,before and after the announcement of the stock repurchase plan,this repurchase has an announcement effect,and Joyson Electronics has generated significant cumulative excess returns within a few days after the announcement of the implementation of the stock repurchase.In the long run,with the help of the closing data of Joyson Electronics,the broader market and the industry,it was found that stock repurchases also have a role in boosting stock prices.In the analysis of financial effects,with the help of traditional financial indicator analysis,this paper concludes that this repurchase has increased the debt risk of Joywin Electronics,improved the working efficiency of liquidity and fixed assets,but limited growth and profitability.However,the change of the index cannot give the conclusion of positive or negative financial effects on the shareholders 'equity.The analysis of the index also has problems such as the inability to remove the cost of capital and the discrepancy between the profit of the financial statements and the actual operating profit.According to the analysis,after the repurchase,the added value of the wealth brought by the company's operations to shareholders has increased,in general,the benefits outweigh the disadvantages.Finally,this article summarizes the background,motivation,process,and economic effects of Joyson's electronic repurchase mentioned above,and provides enlightenment and suggestions from three aspects: company operators,investors,and policy makers.For company operators,they should make adequate preparations before implementing stock repurchase,prevent information leakage when preparing to announce the repurchase plan,and actively prevent the risks associated with repurchase after implementing the repurchase.For investors,they should make a decision after fully understanding the operator's repurchase intention.The stock repurchase can be regarded as a positive signal as an investment reference,and the utility of the stock repurchase must also be viewed rationally.For policy makers,the stock repurchase is important capital operation method that should be improved by relevant laws and regulations to encourage and support,but at the same time,it shall also strengthen supervision to prevent acts such as fake repurchase.