A Study On The Effects Of Stock Repurchase In China's Listed Companies

In 2015,China's stock market experienced tremendous turmoil,encouraged by national policies,the number of companies that repurchased shares between 2015 and 2016 surged rapidly.Share repurchase act how they affect the financial status of listed companies and stakeholders,what effect will the market have,whether the approuch is useful for maintenance of market stability,this is a question that needs to be studied.This article uses shenzhen HEPALINK pharmaceutical group co.,ltd.as a case company.Take motivation-effect-impact as the analysis of ideas,draw the following conclusions:First,the stock repurchase solvency,operational capacity and profitability have different degrees of decline.In addition,the short-term solvency and long-term solvency that were originally superior to the industry average were reduced to below the industry average.Therefore,the stock repurchases did not give the case companies a positive financial effect.And did not substantially improve the financial status of the company.Second,stock repurchases have produced market effects in the short term.The announce of the stock repurchase plan has produced a positive signal in the market.So HEPALINK stock produced abnormal return of 7.65% in the same day announced repurchase plan,and pull negative cumulative abnormal return back to around 0%.However,the remarkable abnormal return lasted for only three days,and it stabilized and remained at around 0.17%.Explaining that investors' positive reaction to market signals has only a short time stimulating effect.In the future,investors will take a rational view of the information on stock repurchases.In the long term,the market effect of repurchase is very limited.Third,stock repurchases generate shareholder wealth.During the repurchase of shares,Primary Earnings Per Share rises to a maximum of 0.72 yuan within two years.Major shareholders increase their holding ratio by 2.66%.While increasing the total cash dividend distribution and dividend payout ratio,and the effect of repurchases.The combined effect of these effects has generated 1.967 billion yuan in shareholder wealth.But repurchasing changes original capital structure and also changed the company's solvency.It increases the risk of creditor burdened.