A Study Of The Motivation And The Effect Of Share Repurchase Of Listed Companies In China

Share repurchase originated from western countries,and its research in western countries is far more than that in China.Therefore,share repurchase has developed to a relatively mature stage in the western capital market,and it is still in the growth stage in China.At the initial stage,the purpose of share repurchase in China is relatively single,and the main purpose of share repurchase is to merge with other companies or reduce the registered capital.With the new revision of China’s "Company Law" in 2018,the operation process of share repurchase is more simplified,the time limit of share repurchase is longer,and the repurchase policy is more and more relaxed.Therefore,the use of share repurchase in China’s capital market is more and more abundant than before,and listed companies are buying shares more and more frequently.Both the amount and quantity of share repurchase show a rapid growth trend,which arouses a big wave of share repurchase boom.Theoretically,the listed companies choose to use share repurchase in order to improve the company’s share price and then maintain the company’s value.Actually,whether share repurchase can improve the company’s share price remains to be discussed.In addition,share repurchase may also have a certain indirect effect on the company’s financial indicators,and it will have a significant impact on its debt repayment,operation and growth ability.Therefore,it is of great significance to study the motivation and effect of share repurchase of listed companies,which can promote the management of companies and investors to better understand the results of share repurchase,thus providing useful reference for their decision-making.This study takes the three-phase share repurchase in Gree Electric from 2020 to 2021 as the case study object,takes principal-agent theory,signal transmission theory and financial effect theory as the theoretical basis of the case study,and studies the motivation and effect of the third-phase share repurchase in Gree Electric through case study,financial index analysis and event study.The first part of this study introduces the background,research significance,research contents and methods of share repurchase,and then summarizes the research results of share repurchase at home and abroad.Finally,it summarizes the theoretical basis of share repurchase,that is,the motivation theory of signal transmission theory,principal-agent theory and financial effect theory,which lays a theoretical foundation for the following case analysis.The latter part of this study mainly studies the case of Gree Electric share repurchase.Firstly,it introduces the company profile,operating status and the specific implementation process of the third phase share repurchase in Gree Electric.Then,based on the theoretical basis mentioned above,it studies and analyzes the motivation of Gree Electric share repurchase,and draws a conclusion that the motivation of Gree Electric share repurchase is to raise the stock price to maintain the company value,implement equity incentive or employee stock ownership plan,optimize the company capital structure and improve the efficiency of capital use.Next,the research on Gree Electric’s share repurchase effect is divided into two parts:financial effect and market effect.The financial effect of Gree Electric’s share repurchase is studied by using the financial index analysis method,and the conclusion is drawn:Gree Electric’s share repurchase has obvious influence on its long-term solvency and operating ability,but it has certain positive influence on its profitability,short-term solvency and growth ability,but the influence effect is not obvious.Gree Electric’s share repurchase plan has not changed Gree Electric’s comprehensive ability very much,and its comprehensive influence ability is weak;Using the event study method,this paper studies and analyzes the market effect of share repurchase in Gree Electric,and draws a conclusion:all the three share repurchases in Gree Electric can improve the company’s stock price and maintain the enterprise value in different degrees,among which the second share repurchase has a more significant positive effect than the first share repurchase,and the third share repurchase has the least significant positive effect,and the time for maintaining the positive effect is shorter.Finally,based on the research conclusion of Gree Electric’s share repurchase case,this paper puts forward suggestions from three aspects:investors,management of listed companies and market supervision departments.