Analysis On The Motivation And Effect Of The Share Repurchase Of MD Group

In 2018,the number of listed companies that conducted stock repurchases in the A-share market hit a record increase to 782,totaling 61.702 billion Yuan,which was nearly 6.25 times as much as in 2017 and 1.76 times as much as the gross of the previous four years.The proliferation and scale expansion of the companies that repurchase stock necessitates the verification whether the existing mature western theory adapts to China’s current development situation,in an effort to provide theoretical basis and classic cases for the government,listed companies and the public.Guided by the methods of Literature Research,Case Study,Event Study and Comparative Analysis,this paper will first analyze the theoretical motivations of stock repurchases according to domestic and foreign scholars and review the entire process of MD Group’s stock repurchases in 2018.Then it will verify whether the repurchases meet the common motivational hypotheses according to the authoritative information and data,proceeding with an analysis on whether the impact brought by the repurchases have achieved the intended effects,and ending with recommendations and references based on the analysis.The research conclusions indicate that stock repurchases can boost stock prices in the short term and streamline investment,optimize the choices,and improve the quality of capital input while maintaining profitability.However,high-frequency or large-scale repurchases will reduce short-term solvency of companies.Generally speaking,stock repurchase will yield positive effects.The government ought to improve the laws and regulations on stock repurchase,especially those related to stock system.Enterprises should actively repurchase stocks at a right juncture,while paying due attention to the future development,the risk of short-term solvency and the short-term benefits in the current market environment.Investors should enhance their perceptions of stock repurchases,focusing on value investment rather than short-term speculation so as to help build a sound atmosphere in the market.