Research On The Motivation And Effect Of Stock Repurchase In XHZB Company

Stock repurchase means that the listed company's use of self-sustaining funds or funds raised externally to repurchase its issued shares based on the purpose of raising the stock price and equity incentives,etc.,to reduce the stocks which are still circulating outside.It sprang up in capitalist countries in Europe and America and was developed into a common means of capital operation.Due to its delayed starting in China,which requires more proficiency to operate it well.There are only non-tradable stocks can be repurchased at early stage for solving the problem of excessive concentration of state-owned shares,along with severe limitations.However,with the regulation "Measures for the Management of Public Shares Repurchased by Listed Companies(Trial Implementation)" issued in June 2005,which clarifies that circulation stocks can be repurchased,much more companies start to buy back shares and some laws on share repurchase have been promulgated.In October 2018,the amendment to the Company Law supplements the scope of application of share repurchase,and improves the relevant rules.Accompanied with the sluggish stock market,share repurchase ushered in a peak in 2018.So,it is of great significance to delve the implementation of share repurchase by listed companies in China,and to explore the application of share repurchase as a capital operation mode from the perspectives of motivation and effect.In this paper,based on the case analysis method and the share repurchase implemented by XHZB Company in 2016,the motivation and effect of its implementation are analyzed and summarized.After reviewing the relevant literature at home and abroad,the paper summarizes the relevant concepts,theoretical basis of share repurchase,as well as the research methods of market and financial effects.Then,we analyze the motive of the repurchase on the basis of relevant data and background information of XHZB company around the announcement of the buybacks.The event study method and the financial index comparison method will be used to analyze the market and financial effects respectively,as well as the effect of the repurchase to the company itself.The paper aims to help more stakeholders understand the capital operation mode of stock repurchase through the analysis on motive and effect of stock buybacks,and make contributions to the development of share repurchase in China.This paper is divided into five chapters,the first chapter is the introduction,which mainly introduces the research background and significance.Research status in the relevant fields and relevant methods will be summarized.Then we list the structure of the paper in the form of a framework diagram,and introduce the characteristics and innovations of this study.The second chapter is the interpretation to related concepts and theoretical basis of share repurchase.In this part we introduce the concept,types and modes of share repurchase,and expound several classical theories related to text research and evaluation methods for market and financial effects.The third and fourth chapters are the main parts.In the third chapter,we introduce XHZB Company and review the process of share repurchase.On this basis,the specific motivation of share repurchase is deeply analyzed at many aspects,mainly includes:raising stock price,increasing earnings per share,adjusting financial leverage and increasing financial flexibility.In the fourth chapter,we make a comprehensive analysis to the effect of this repurchase from the market and financial performance.After utilizing the event study method to analyze the performance of the stock market,we can find a positive response from the market after the announcement of the stock repurchase.Through the changes of profitability,solvency,operating ability,growth ability and cash flow,the short-term financial effect is much more significant while the long-term effect is weaker.The fifth chapter is the conclusion and outlook to the paper,which summarizes the analysis results of this case,several thoughts and enlightenment above this analysis.Finally,the shortcomings of the research are also discussed and we put forward our expectation.