Research On Motivation And Economic Effect Of Goertek’s Share Repurchase

With more and more companies making buybacks,the motives and effects of share buybacks have become more and more complex,and the motives of many companies’ buybacks are not exactly the same as the declared motives,and the effects are different from those expected.However,on the same day,it was announced that Mr.Jiang Bin,the chairman of the company,would reduce his shareholding with a market value of 1.67 billion yuan,which caused an uproar in the market.Therefore,this paper takes Geer shares as an example to study the real motives and economic effects of share repurchases.First,we review the domestic and international literature on the motives and economic effects of share repurchases,introduce theories related to share repurchases,introduce Goer’s corporate situation and industry background,and review the entire process of Goer’s share repurchase.Second,we analyze the real motives of the share repurchase of Geer,first,to determine whether it has the ability to repurchase shares and verify the implementation of the declared motive:for the employee stock ownership plan;second,to verify whether there is a signaling motive;third,to analyze whether the share repurchase has a hidden motive to cooperate with major shareholders and executives to reduce their holdings.Again,the economic effects of the share repurchase are analyzed from two aspects: market effect and financial effect.In terms of financial effects,we analyze the impact of the share repurchase on the financial situation by comparing the relevant indexes for several quarters before and after the share repurchase.Through analysis,it is found that Goertek’s motivation for this share repurchase is not limited to the employee stock ownership plan proposed in the announcement,but also implies the opportunistic motive of reducing the holdings of major shareholders,and the economic effect brought by it is also negative on the whole.Based on the research conclusions,suggestions for listed companies and investors are put forward: for listed companies,on the one hand,they should treat share repurchase rationally and formulate a repurchase plan suitable for the company’s situation scientifically and reasonably;On the other hand,it is necessary to establish an effective internal check and balance mechanism to restrain the behavior of major shareholders.For small and medium-sized investors,it is necessary to improve their understanding and judgment ability of share repurchase,and maintain rationality and risk awareness when investing.