A Study On The Motivation And Market Effect Of "Deceptive" Share Repurchase Of Listed Companies

In October 2018,the newly revised "Company Law" increased its support for share repurchase,and listed companies launched a wave of share repurchase,bringing vitality to the sluggish stock market.In 2019,the Shanghai Stock Exchange and the Shenzhen Stock Exchange issued the Implementation Rules for Share Repurchase of Listed Companies respectively,which increased the restriction on the illegal behavior of share repurchase and emphasized the information disclosure obligations of listed companies during the share repurchase period.However,the enthusiasm of the A-share market for share repurchase did not decrease.With the increase of share repurchase cases,there has been a problem in the stock market that insiders manipulate the share price through share repurchase.What’s more,after taking full advantage of the share price boosting effect brought by the share repurchase announcement,"deceptive" share repurchase events have occurred from time to time,either by terminating the implementation of the share repurchase plan,or by not purchasing one share at its maturity,or by the amount of the repurchase falling far short of the lower limit of the share repurchase plan.Based on the information asymmetry theory,signal transmission theory,principal-agent theory and fraud triangle theory,this paper studies the motivation and market effect of "deceptive" share repurchase of listed companies.Firstly,the paper analyzes the main motivation of this "deceptive" share repurchase from the following three perspectives: the share repurchase capability of Soling shares,the share repurchase motivation and the opportunity to implement "deceptive" share repurchase.The event research method is used to study the short-term market effect of Soling’s shares when it issues the announcement of the repurchase plan and the announcement of the early termination of the share repurchase of "one share not being repurchased".Meanwhile,the long-term market effect of "deceptive" share repurchase on Soling’s shares is studied and analyzed.The article sums up the five signals of "deceptive" share repurchase of listed companies from the motivation of "deceptive" share repurchase,which include high corporate equity pledge rate,frequent reduction of corporate shareholders,poor corporate share repurchase capability,chaotic internal control and high concentration of corporate equity,and verifies them by setting up "real repurchases" group and "deceptive repurchases" group.The research conclusions of this paper are as follows:(1)The reasons for Soling’s "deceptive" share repurchase are mainly the lack of share buy-back capability,impure share buy-back motivation and sufficient opportunities to implement "deceptive" share repurchase;(2)The announcement of Soling Share Repurchase Plan can generate positive market reaction,but the announcement of termination of "one share not being repurchased" has brought negative market reaction to Soling Share in both short and long term;(3)The five signals of "deceptive" share repurchase can help small and medium-sized investors and regulators to increase the possibility of identifying "deceptive" share repurchase in advance.Finally,the paper puts forward relevant suggestions from three perspectives: small and medium-sized shareholders’ identification and prevention of "deceptive" share repurchase,listed companies’ performance of their repurchase obligations,and regulatory authorities’ legislation and enhanced supervision of "deceptive" share repurchase,in order to promote the healthy and stable development of China’s share repurchase.