Study On Share Repurchase Motivations And Effects Of Listed Companies

In the 1980 s,deregulation of Western capital markets and intense competition prompted share repurchases as a way for listed companies to stabilize share prices and counteract hostile takeovers.China’s capital market has been affected by domestic and foreign instability,resulting in significant fluctuations in stock prices in recent years.Listed companies have increasingly used share repurchases to rescue falling stock prices,and the number and scale of repurchases have sharply increased.However,some companies have hidden part of their repurchase motives in their announcements,disrupting market order and affecting investor judgment.In this situation,studying the true motives and effects of share repurchases is of practical significance.Mindray Medical used CNY 2 billion of its own funds for two public market repurchases in six months,making it the most representative routine repurchase completed in 2021-2022.This thesis first systematically sorts through the research of domestic and foreign literature interrelated to share repurchases,outlines the theoretical foundations interrelated to share repurchases.Secondly,it analyzes the current situation of share repurchases of listed companies in China from the aspects of repurchase scale,industry classification,and repurchase methods.Based on signal transmission theory,agency theory,and financial effect theory,it discusses the motives for share repurchases of listed companies in China and finds that there is a phenomenon of "deceptive" repurchases in China,and there are problems such as low compliance costs.On this basis,using Mindray Medical as a case study company,the thesis investigated the process of its share repurchase,and used event study method,entity cash flow model and other methods to analyze the effects of Mindray Medical’s share repurchase from both market and financial aspects,and analyzed the true motives of Mindray Medical’s share repurchase in depth.The research conclusions of this article are as follows:(1)The impact of share repurchases on the financial situation of companies is a mix of pros and cons.Share repurchases have improved Mindray Medical’s profitability and operational capabilities,but have had a certain adverse impact on the company’s debt-paying ability and overall financial performance ranking.(2)The motives for share repurchases by companies are diverse,and some companies announce false reasons for their share repurchases.Companies do not necessarily disclose all of their true motives or reasons for share repurchases in their public announcements,so to avoid misleading information,it is necessary to investigate their true motives.(3)Share repurchases do not have a longlasting impact on stock prices.In addition,this article proposes suggestions for regulatory agencies to accurately identify the true motives of share repurchases by listed companies,standardize and guide the behavior of corporate share repurchases,and establish a system of punishment for share repurchase dishonesty to further promote the development of share repurchases in China.