Research On The Market Reaction Of Concentrated Bidding Repo

Share repurchase is one of the hottest keywords in the capital market.In 2018,the repurchase amount and repurchase amount exceeded the sum of the past four years.The number of centralized bidding repo is also increasing.If you carefully observe these repurchase plans,you can find that the purpose is nothing more than raising the stock price or equity incentives.So when the company released a repurchase plan that was motivated by the stock price increase,can it really raise the stock price?Will the motives disclosed in the plan have a significant impact on its market reaction?Based on the perspective of repurchase motives,this paper studies the market reaction of centralized bidding repo.Based on the signal transmission hypothesis and the stock option hypothesis,combined with the current situation of Chinese repurchase motives,this paper takes the centralized bidding repo plans that have been completed or have stopped during the period of 2011-2018 as a sample,and divides it into the promotion of stock price and equity incentives.Then use the event research method and multiple regression analysis to study the relationship between repurchase motives and market reactions.The main conclusions are as follows:(1)At present,the main type of repurchase in China's market is equity incentive repurchase.At the same time,some companies are not motivated to repurchase,and the progress is at the stage of board meeting and shareholders meeting.Besides,the proportion of completed repurchase is lower,and the actual repurchase amount is much smaller than the predetermined repurchase limit.(2)The market's response to the release of all concentrated bidding repurchase plans is positive.However,the positive rate of return before the repurchase indicates that there may be a phenomenon of early disclosure of information.(3)There are differences in the repurchase market response of different motives.The response of repurchases used to raise the stock price is more positive than the one of repurchases used to implement equity incentives.(4)Under the same motive,the lower the company's P/B ratio,the more positive the repurchase market response.This indicates that the market has a more positive response to companies with more undervalued stock prices,which is more obvious in the repurchase used to raise the stock price.The characteristic of this paper is that the research object concentrates on bidding repo,and the research methods are event study method and multiple regression analysis.The final conclusion can enrich the existing literature on the share repurchase market reaction to a certain degree.On the other hand,this paper compares the market reaction of different repurchase motives,and analyzes the impact of motives on market reaction,which helps the regulatory agencies such as the CSRC to regulate the disclosure about motives of listed companies' share repurchase.So this study also has some practical significance.