Research On The Motivation And Market Reaction Of Stock Repurchase Of Chinese Listed Company

Stock repurchase refers that a listed company repurchases a certain amount of stock from the stock market by means of its own cash or debt financing.Stock repurchase is an important tool in the capital market and also an effective financial management tool.Originated in the United States and widely applied abroad,stock repurchase started late in China.With Chinese characteristics,the early repurchases were mainly to resolve the issues of excessive proportion of the state-owned equity and Non-tradable Shares Reform.With the development of capital market and the change of the market environment,stock repurchase in China is gradually moving towards marketization.In recent years,the number of listed companies carrying out stock repurchase in China has been increasing.Especially when stock price faces a significant downturn in the secondary market,stock repurchase has become a "price protection" measure,which has triggered a boom in stock repurchase.Since the stock repurchase in China is still in the exploratory stage,the in-depth analysis of the motivation and the market reaction of stock repurchase can enrich the theoretical research,help investors view stock repurchase rationally,provide a useful reference for Chinese regulatory to correctly guide the stock repurchase,lead the correct application of stock repurchase in China and promote healthy development of China capital market.This paper is divided into six chapters.The first chapter is the introduction,explaining the background and the significance of the paper,presenting the research idea and methods,introducing the innovation and deficiency of the paper.The second chapter is the literature reviews,which conducts a classification and summary of the foreign and domestic researches about the motivation and market reaction of stock repurchase.The third chapter is a theoretical analysis based on the asymmetric information theory,in which the internal information asymmetry leads to the principal-agent theory in stock repurchase,and the external information asymmetry leads to signaling theory in stock repurchase.The fourth chapter is the status analysis,which reviews the institutional background and development process of stock repurchase in China,and conducts a series of data analysis,including the number and the way of stock repurchase,the source of fund,the motivation and the performance of share price after the announcement of stock repurchase.The fifth chapter is the main part of this paper.Based on the case of Montnets Rongxin Technology Group Co.,Ltd,the motivation of announcement of stock repurchase has been verified and analyzed,the market reaction has been analyzed with the event study,and a further analysis of implicit motivation has been made according to the market reaction.The sixth chapter is the conclusion,suggestion and the prospect of the study,drawing the conclusion of this research,giving relevant suggestions and prospecting the further study based on the limitations.The contribution of this paper lies on the following two aspects.Firstly,the case of this paper is relatively typical.Montnets Rongxin Technology Group made a second stock repurchase announcement only one week after its first stock repurchase.This continuous repurchase is rare in the A-share market,but very common in mature capital markets,so it may become a common phenomenon of the future capital market in China.An analysis has been made in this paper about the similarity and difference between the two stock repurchases,which helps to enrich the theoretical research.Secondly,this paper has made a further analysis of implicit motivation according to the market reaction,pointing out the problems existing in the repurchase,offering policy proposals,which provides the Chinese regulatory with some references to encourage and standardize stock repurchase.There are two inherent limitations in this paper.Firstly,as a case study,this paper contributes to an in-depth study of stock repurchase,but the conclusion can not be applied to all the companies that conduct stock repurchase.Secondly,the data of this paper is only public data,,which limits the depth of this study to a certain extent.