Research On The Motivation And Financial Effect Of Jinhe Industrial’s Share Repurchase

Share repurchase is a tool for financial management of listed companies,and plays an active role in stabilizing stock prices and maintaining corporate value.In 2018,my country revised the new "Company Law of the People’s Republic of China" to simplify the procedures for share repurchase,further relax the repurchase conditions,and extend the time for the repurchased shares to be used as treasury shares.Relevant laws and policies are constantly promoting the flexible use of share repurchase as a financial management tool by enterprises,which makes share repurchase favored by Chinese listed companies in recent years.In this context,it is of great practical significance to study the plan design,motivation and financial effects of the listed company’s share repurchase,which is of great practical significance for the listed company to stabilize the stock price and maintain the enterprise value.This study takes the three-phase share repurchase implemented by Jinhe Industrial from 2015 to 2019 as the case study object.Based on the signal transmission theory and principal-agent theory,it uses the case study method,event study method and financial indicator analysis method.Firstly,it introduces the research background and significance of share repurchase;secondly,it studies the scheme design,motivation and financial effects of Jinhe Industrial’s share repurchase;finally,it evaluates the case of Jinhe Industrial’s share repurchase and draws relevant conclusions Inspiration.Through the research on Jinhe Industrial’s three-phase share repurchase,it is found that: First,the design of Jinhe Industrial’s share repurchase scheme is in line with the motivation and operating status of the company before the repurchase.Secondly,the main reasons for the share repurchase of Jinhe Industrial are: stabilizing the stock price and maintaining the enterprise value,implementing equity incentives or employee stock ownership plans,improving the efficiency of capital use,optimizing the capital structure of the enterprise,and replacing and supplementing the cash dividend policy.Finally,the financial effects of Jinhe Industrial’s share repurchase mainly include: it can boost the stock price in the short term and bring positive excess returns,maintain the value and image of the company,and at the same time optimize the capital structure of the company in the short term.To a certain extent,it will improve the profitability and development ability.This study draws the following implications: First,companies should be cautious in formulating plans to implement share repurchases.Second,the source of funds for share repurchase can be obtained in various ways to prevent financial risks.Third,companies can manage market value through share repurchase.Fourth,the standardization and transparency of information disclosure should be ensured during the repurchase process.By analyzing the case of Jinhe Industrial’s share repurchase,this study hopes to provide reference value for listed companies in the same industry that want to carry out share repurchase,so that share repurchase can give full play to its market function.