Research On Market Effect Of Share Repurchase And Influencing Factors Of Listed Companies

Share repurchase means that the listed company repurchases its issued or outstanding shares in the secondary market under the premise of legal permission.The repurchased shares can be cancelled or used as Treasury stock for future use.The main buybacks include cash,debt-for-equity swaps and conversion of preferred stock into common stock.In 2018,the new draft of the Company Law was issued,and the circumstances of stock repurchase were relaxed from the original four to six.Two new circumstances were added: "Converting shares into corporate bonds issued by listed companies that can be converted into shares" and "necessary for listed companies to safeguard corporate value and shareholders’ rights and interests".Treasury stock system was further improved and the source channels of buyback funds were expanded.In the same year,China Securities Regulatory Commission issued Opinions on Supporting Share Repurchase of Listed Companies,aiming at improving relevant institutional arrangements,encouraging listed companies to actively carry out share repurchase and promoting high-quality development of the capital market.Since then,our capital market has ushered in the wave of stock repurchase,frequent share repurchase has become the normal.Compared with Europe and America,the capital market has been established for a short time,and it is still in the stage of development.The various systems are still being improved,and the related research of share buyback has more positive and broad significance.The main object of this paper is the stock buyback behavior of listed companies and its market effect.First,review the relevant laws and regulations of share repurchase,grasp the direction of the policy and the interpretation of the future trend.This paper compiles and examines the pertinent research theories and literature on share repurchase,both domestically and internationally,in light of the four primary queries: "why and when do listed companies carry out stock repurchase?","how does stock repurchase influence the stock price of listed companies," and "what are the elements that influence the stock repurchase of listed companies?".This paper analyzes the excess rate of return brought by share repurchase for listed companies,namely the market effect,and summarizes the influencing factors of the market effect accordingly.A total of 446 A-share listed companies that have announced and implemented share repurchase during the three-year period from2020 to 2022 are selected as samples.The empirical results show that,on the whole,the excess return rate of listed companies in the ten trading days before and after share repurchase is significantly positive,the excess return rate of the first ten trading days is slightly lower than that of the next ten trading days,and the excess return rate of the first five trading days is about twice that of the next five trading days,indicating that share repurchase has a positive impact on stock price on the whole.However,there are also some cases of information leakage of listed companies.In terms of buyback purpose,the excess yield of ordinary buybacks for cancellation is higher than that of special buybacks for equity incentive,mainly because ordinary buybacks directly improve the current financial structure of listed companies,promote the earnings per share,and the stock price reaction is more obvious.The excess return rate of large-market listed companies is superior to that of small-market listed companies in terms of company market value,the main distinction being investors’ assessment of the trustworthiness of different types of listed companies.Using the signal transmission hypothesis,corporate cash flow hypothesis,financial leverage hypothesis and other major research results at home and abroad,this paper puts forward the hypothesis The multiple regression method for empirical analysis was employed to examine the influence of market factors on corporate background,revenue growth,asset-liability ratio,buyback purpose and proportion,whether senior executives increased their holdings,cash dividend,and so forth.The results demonstrate: 1.In general,stock repurchase has a positive market effect,but a small number of announcements of listed companies are leaked in advance;2.The effect of buyback for ordinary purposes is better than that for equity incentive purposes;3.Buyback proportion is positively correlated with buyback effect.This paper proposes improvements for the government,listed companies,and investors,based on the research conclusions presented above.First,the capital market’s laws and regulations should be continually advanced by the government,with the supervision and preventive measures of insider trading being reinforced,stock repurchase procedures standardized,and investors’ access to pertinent information broadened.Second,the listed company shall carry out share repurchase timely,actively and stably,taking the capital market environment and industry development cycle into consideration,in combination with its own financial situation and long-term strategic development of the company;Third,investors should improve their market cognition and professional quality,dialectically view the impact of share repurchase on listed companies,Seeking out multiple sources of information to heighten their cognizance of safeguarding their rights and interests is a must.