Study On The Motivation And Financial Effect Of The Stock Repurchase Implemented By Focus Media

Stock repurchase refers to the behavior of listed companies buying their own liquid stock back from the market by using their own funds or debt financing methods,which is considered to have the effect of signaling,increasing financial flexibility and reducing agency costs.Stock repurchase originated from the western capital market in the last century.It was first widely used as an alternative to dividend in the context of the Oil Crisis in the 1970 s.With the improvement of relevant laws and regulations,the frequency of western listed companies using stock repurchase has increased,and the motivation behind has become more and more diversified.In terms of our country,the development of stock repurchasing lagged behind because the capital market of China started quiet late.The first pack of stock repurchase in China,including Dayuyuan merging Xiaoyuyuan,was politically oriented and mainly to serve the reform of non-tradable shares.However,implementing stock repurchase has been seen more and more in China's capital market in recent years thanks to the modification of related laws and regulations,the transparency of public disclosure of information,and the lifting of strict limits.Take data in 2018 as an example,money used for stock repurchase in 2018 was more than 50 billion yuan,surpassing the sum of that in the last few year,and the rising number in 2019 also suggests the trend of growing and the strong enthusiasm of the market.As the rise of the stock repurchase in China tells us that we are trying to follow the steps of international standards,the understanding and research of stock repurchase in China are still in the stage of development,meaning studying stock repurchase behavior of listed companies in our country can both check the existing theory and provide reference for investors,companies to do repurchase and the regulators.Under the background mentioned,this paper selects the stock repurchase case implemented since 2018 by Focus Media," Top 1 share in media industry",to study and analyze the impact of stock repurchase on Focus Media through literature research,case analysis and event analysis.Firstly,the background of stock repurchase and the research significance,research method and research content is going to introduced.Then,on the basis of reading relevant literature,this paper will explain the concept,classification,main theories and research status of share repurchase.In the part of case study,by collecting public information such as focus media's annual report and announcement,the case company will be briefly introduced,the repurchase process will be thoroughly described,and the multiple motivations of the repurchase will be analyzed based on the actual situation of focus media.Next,by using the event study method,financial index analysis method,EVA analysis method and so on,this paper carries out calculation analysis and comparative analysis on the influence of focus media on the announcement time point and the repurchase time period respectively,by which finally work out the market effect and financial effect of this repurchase.According to the results,the paper will try to find out the problems of this case,and end with summarizing the conclusion and enlightenment.Through the research of this paper,the following conclusions are drawn: first of all,the motivation of share repurchase has the characteristics of diversity.Secondly,the market effect of this buyback is limited and the financial effect is negative,which indicates that stock repurchase is no magic pill.Finally,the timing of Focus Media to implement repurchase is questionable,and the effect of the repurchase is affected by the timing and the enterprise's own situation.It is hoped that through the study of the repurchase case of Focus Media in this paper,it can provide reference for other listed companies that want to repurchase,investors and regulators.