Research On The Motivation And Financial Effect Of Stock Repurchase In Listed Companies

In recent years,China has been implementing a prudent monetary policy,which makes the share price of listed companies at the bottom of the market.With the continuous impact of the global COVID-19,Shanghai Composite Index has also seen an irrational downward trend.Although the number of listed companies is increasing and the capital market is gradually maturing,many blue chips are still being suppressed.Theoretically,in order to directly reduce the number of circulating shares in the market,the company will take stock related activities to improve earnings per share and the company’s share price.Around 2020,many listed companies in China began to buy their own shares in the secondary market with their own funds.The increase of stock repurchase cases in China has attracted extensive attention of a large number of scholars.Especially in the current social environment,studying the scheme,motivation and chain reaction of stock repurchase of various enterprises is of great significance to the maintenance of the market value of listed companies.In this context,in order to enable enterprises to better implement stock related activities,this thesis will study the motivation and financial effect of stock repurchase of Listed Companies in China.As a typical domestic blue chip stock of Shanghai Stock Exchange,Gree Electric announced on April 13,2020 that it planned to use its own funds of 6 billion to repurchase the company’s shares in the secondary market,and said that the repurchase would have a significant impact on the company’s solvency,operating capacity and growth capacity.Therefore,this thesis takes the repurchase plan of Gree Electric as the research object,and describes the research results in detail in five chapters.The first chapter describes the background,purpose and significance of this research,and summarizes the current research status of stock repurchase in combination with relevant domestic and foreign literature;The second chapter introduces the general situation of the case company and the general process of this repurchase;The third and fourth chapters use the ratio research method to compare the relevant indicators before and after Gree’s stock repurchase,such as economic value added(EVA)and price earnings ratio(PE),with other companies in the same industry,and summarize the motivation and financial effect of Gree’s stock repurchase according to these indicators;The fifth chapter draws some valuable conclusions and Enlightenment for the enterprise itself and the external environment.The research results of this thesis show that the motivation of Gree Electric’s stock repurchase mainly includes increasing the stock price,implementing equity incentive,optimizing the capital structure,increasing the earnings per share and making full use of cash flow;In terms of financial effect,this thesis believes that the implementation of stock repurchase can only optimize the profitability and stock price of Gree Electric Appliance in the short term,and it is difficult to have more positive impact in the long term.Therefore,if you want to really improve the comprehensive value of the company,you need to support it with a good performance level;This thesis holds that enterprises should pay attention to the Enlightenment of the formulation and efficient management of various national strategies and problems in their daily operation;In terms of the market,we need to appropriately relax the relevant constraints on stock repurchase,enrich the ways and sources of funds for stock repurchase,improve the relevant legal system and severely punish insider trading in the process of supervision according to law,so as to protect the interests of small and medium-sized investors.