| In 2018,the state promulgated the opinions on supporting listed companies to repurchase shares.The document is specially revised in terms of the situation of share buyback,decision-making procedures,upper limit and term of shareholding,as well as the source of funds for buyback,etc.This encouraged the enthusiasm of listed companies for share buyback.According to wind data,926 share repurchases were conducted in 2018,with a total amount of 25.26 billion yuan,2082 times in 2019,with a total amount of 129.43 billion yuan.The buyback of A-share listed companies has been strengthened.Firstly,this paper summarizes the research results of share buyback from three aspects: buyback motivation,financial effect and market effect.Put forward theories related to share buyback.On this basis,the case study of share buyback of Midea Group and Suning e-buy is carried out.Secondly,taking the theory of share buyback as the starting point,this paper analyzes the real motives of the two selected companies.It points out that the main motivation of American buyback is to boost stock price,equity incentive and increase earnings per share.In addition to these three reasons,Suning e-commerce also has the purpose of adjusting capital structure and replacing cash dividends.Thirdly,it analyzes the financial effect before and after repurchase from the indicators of solvency,growth ability,profitability and operation ability.It is found that in terms of debt paying ability,the debt paying ability of the United States remains basically unchanged before and after repurchase,and is far better than Suning e-commerce.Suning e-buy has increased its financial leverage and reduced its solvency through share repurchase and debt increase.In terms of the growth ability and profitability of the two companies,Midea Group maintained a stable growth trend during the share buyback period.Suning e-commerce is growing rapidly,but the growth of Suning e-commerce comes from non operating profit and loss.This growth rate is unsustainable.In terms of operating capacity: during the share buyback period,Suning e-buy's operating capacity is better than Midea Group.Then this paper uses the event analysis method to analyze the market effect of the buyback of the two companies.It is pointed out that the stock prices of the two companies continued to fall in the trading days before the issuance of share buyback,and the excess return rate was negative.On the day after the announcement of repurchase or in the following days,the excess yield will become a positive number.However,the stock price of Midea Group did not increase significantly either on the date when the stock repurchase plan was issued or on the date when the stock repurchase announcement was issued.Suning's shares rose sharply on the day of the announcement.Through the comparative analysis of the two companies,we get the following enlightenment.First,different financial basis and share repurchase motivation bring different share repurchase effects.We should reasonably expect the financial effect and market effect of share buyback,combine financial policy and corporate strategy,and take multiple measures to improve corporate governance and business performance.Second,a large amount of cash outflow from share repurchase may bring financial risks to the company.If the company's cash flow is not sufficient,it should make a good plan to supplement cash flow,stabilize financial indicators and reduce financial risks.Third,listed company should pay attention to the synergy of share buyback and other strategies,so as to better play the role of share buyback.The conclusion of this paper has a strong reference value for those listed companies which have similar situation with Midea Group and Suning e-buy and are ready to carry out share buyback. |
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