Research On The Motivation And Financial Effect Of Stock Repurchase Of Xinhu Zhongbao Co.

Redemption originated in the United States in the 1950 s,which refers to the financial behavior of listed enterprises using surplus funds or debt financing funds to redeem the common stock issued by the company at an agreed price in the stock market and cancel it after redeem or as a treasury stock.Share redemption can also be called stock redemption.In the 1990 s,redemption began in the stock market of our country.In 1992,Dayuyuan successfully redeemed all the shares of Xiaoyuyuan in the form of agreement and cancelled,which is the first attempt of redemption in China’s capital market.Because of strict legal policy and special capital environment,a few redemption in the early period of our country is only used to solve the problem of unreasonable asset structure of State-owned Enterprises,and it does not have commercial significance.In 2005,the reform of split-equity offered a historical opportunity for the development of redemption in Chinese stock market.In recent years,with the development of Chinese stock market and the improvement of the redemption system,redemption has been more and more favored by many companies,and has gradually become a common financial means for listed companies to maintain and operate for development.Xinhu Zhongbao Co.,Ltd.’s main business is real estate development,in recent years to expand to information technology and financial services.In June 2015,Xinhu Zhongbao share price began to fall,from the initial 5.81 yuan per share fell to 3.58 yuan per share,decreased by38.38%,the enthusiasm for equity has been seriously weakened.On January 18,2016,Xinhu Zhongbao announced a plan to redeem shares,and decided to invest 10 to 20 billion yuan of its own funds to implement the plan,and the proportion of redeemed shares accounted for about 5.5percent of the total share capital.Based on the theory of analyzing the motivation and effect of redemption,and combining with the practice of many enterprises at home and abroad,I make a thorough study on the typical case of implementing redemption in Xinhu Zhongbao by means of literature research,inductive analysis and case analysis in this thesis.Through data analysis,this thesis found that the motivation of Xinhu Zhongbao redemption is mainly to stabilize the company’s stock price,improve financial flexibility,adjust financial leverage,and make full use of cash flow.This thesis compares the financial index data before and after Xinhu Zhongbao redemption to draw the following conclusion,first of all,stabilizing the stock price is the main implementation purpose of the redemption of listed enterprises.There are many internal reasonsand external reasons for Xinhu Zhongbao redemption,and the key reason is to save the stock price which has been falling irrationally.In the end,this thesis puts forward some suggestions from several aspects: first,the company should plan the redemption scheme suitable for the development of the company;second,attach importance to the information disclosure supervision system in the process of redemption;third,optimize the stock collection system of the joint-stock company;Fourth,China Securities Regulatory Commission should standardize the share redemption policy and improve the redemption market.