Research On The Motivation And Effect Of Share Repurchase In Rightway Holding Co., Ltd

In recent years,under the trend of steady economic rise,China has gradually lifted the restrictions on share repurchase,and supported,encouraged and guided listed companies to carry out share repurchase.With the revision of relevant laws and regulations on share repurchase in the Company Law of the People’s Republic of China by the National People’s Congress in 2018,the repurchase procedure has been simplified and the upper limit of buyback scale has been further expanded.The capital market is more and more perfect to the supervision of share buyback,and then our capital market set off the upsurge of share buyback.However,this also exposes some problems.Listed companies may take advantage of the positive signals brought by share repurchase to realize their own opportunistic motives.They do not have the ability to repurchase and eventually have to terminate share repurchase due to various reasons such as financial situation,which damages the interests of minority shareholders.Taking this as the starting point,this paper selects the case enterprises with low completion rate of share repurchase to study the motivation and effect of its repurchase,which has certain theoretical and practical significance for regulating the share repurchase market.The reason why this paper selects the share repurchase event of RIGHTWAY Holding Co.,Ltd.in 2021-2022 is that,unlike many successful share repurchase cases,RIGHTWAY terminate the share repurchase in advance before the expiration of the repurchase period,and the final completion rate is far lower than the lower limit of repurchase announced by the plan.This paper believes that it may not have the ability to buy back,and even bring negative market impact,misleading investors’ decisions,should be paid attention to.Therefore,the buyback behavior of RIGHTWAY is selected as the case study object to analyze the motivation,financial effects and market effects of issuing buyback plans,so as to provide reference for investors to make rational investment,provide reference for regulators to strengthen effective supervision,and urge listed companies to initiate share buyback behavior in a reasonable and prudent manner.This paper first introduces the relevant background and research significance of share repurchase,and reviews the domestic and foreign research literature on the motivation and effect of share repurchase.Then,it expounds the basic concept of share repurchase and relevant theoretical basis.In addition,this paper introduces the development status of share repurchase and the background and process of RIGHTWAY’s share repurchase.Then analyze the buyback motivation of RIGHTWAY’s share repurchase and the reasons for its termination;Then it analyzes the financial effect and market effect of RIGHTWAY’s share repurchase.Finally,according to the analysis of this paper,the conclusion is drawn,and some specific suggestions are put forward for regulators,listed companies and investors.Through case analysis,this paper finds the following conclusions:(1)The motivation of RIGHTWAY’s share repurchase is mainly to convey the signal that the stock price is undervalued,but there is also opportunistic motivation;(2)RIGHTWAY did not have the ability to buy back shares.During the buyback period,the deterioration of the financial condition and business environment and the risk of the controlling shareholder were not resolved,leading to the low efficiency of buyback and the final termination of buyback in advance;(3)Share repurchase has no positive financial effect on RIGHTWAY HOLDING CO.,LTD,and it is difficult to improve the financial indicators.The improvement effect on profitability and operating capacity is not significant,and it will weaken the solvency of the enterprise;(4)RIGHTWAY’s share repurchase behavior has a weak effect on stock price improvement.Early termination of share repurchase will cause negative market reaction.