Research On The Motivation And Economic Consequence Of Several Stock Repurchases Of Lingrui Pharmaceutical

Stock repurchase refers to the behavior that listed companies use their own funds,external loans or other funds to repurchase the company’s shares in the open market,so as to reduce the company’s registered capital or for equity incentive and other purposes.In recent years,both the number and amount of share repurchase have shown rapid growth,and the scale of share repurchase has gradually matured under the strong support of national policies.On January 5,2022,the China Securities Regulatory Commission issued the Opinions on Share Repurchase by Listed Companies,which further improved the existing stock repurchase system in China and promoted the rapid development of stock repurchase.Linggrui Pharmaceutical,as a typical pharmaceutical manufacturing enterprise,has carried out three stock buybacks between 2018 and 2021,which is highly representative.In view of the fact that there is no case study of the small and medium-sized private family enterprises conducting many stock buybacks while the proportion of domestic enterprises is relatively large,we choose this case to provide reference for the subsequent company stock buyback.Based on the existing theories of stock repurchase at home and abroad and the company’s own operating conditions,this paper uses comparative analysis to study and analyze the motivation and eventual economic consequences of Lingrui Pharmaceutical’s multiple stock repurchases.In terms of buyback drivers,this paper divides them into direct drivers and potential drivers.The direct drivers include increasing stock prices and equity incentives,while the potential drivers include optimizing capital structure and improving fund utilization.As for the economic consequences of repurchase,this paper divides into two aspects: market reaction and financial effect.In terms of market reaction,this paper uses the event study method to analyze the market reaction,and the results show that stock repurchase can produce a positive impact in the short term,but as time goes by,investors recover their rationality,the positive impact will gradually weaken and disappear.In terms of financial effect,this paper is not only based on traditional financial indicators,but also innovatively introduces EVA indicators.Finally,the two research results are basically the same.After the implementation of stock repurchase,financial indicators and EVA have not been significantly improved,and sometimes even have negative effects.Based on the above research conclusions are drawn and corresponding research suggestions are put forward,hoping to help guide companies and investors to correctly understand stock repurchase and promote its steady development.