Research On The Motivation And Effect Of Stock Repurchase In Lomon Bilions Group

Stock repurchase refers to repurchasing of stocks issued by listed companies.It is a necessary means for listed companies to optimize their capital structure,stabilize stock prices,implement mergers and acquisitions,and has become a basic institutional arrangement in the capital market.After 2018,the company law for China’s stock repurchase system has been further improved,the choice of stock repurchase companies increased significantly,hit the peak in history for two consecutive years,caused scholars’ wide attention.They further conducted in-depth research on the motivations of stock repurchase,market effects and financial effects brought by stock repurchase.In this paper,we choose Lomon Billions Group as the research object,and the research methods combining case analysis method,event research method and financial index analysis are used to study the motivation,market effects and financial effects of the stock repurchase of Lomon Billions Group,with a view to providing theoretical guidance for other companies that are or are planning to repurchase stock.This paper firstly introduces the background and sorts out the relevant literature on domestic and foreign stock repurchase.Secondly,it is a brief overview of the theory of stock repurchase,the definition of stock repurchase,the way of stock repurchase,the nine motivations of stock repurchase,and then analyzes the current status of China’s stock repurchase,and then the case study of the Lomon Billions Group,including the basic situation of the company before the stock repurchase overview of the stock,the verification of the repurchase motivation hypothesis,other potential drivers analysis,stock repurchase caused by the market effect and financial effects.Finally,we put forward corresponding suggestions for the stock repurchasing behavior of Lomon Billions Group.The conclusion of the study in this paper is: Firstly,the motivation of the stock repurchase of the Lomon Billions Group:(1)maintaining a reasonable valuation of the stock price;(2)reserving stocks for employee stock ownership plans;(3)increasing capital utilization and reducing agency costs;(4)adjusting financial leverage and optimizing capital structure;(5)alternative dividend payment;(6)preparations before the restricted stock is lifted;Secondly,this paper through the event research method found that the stock repurchase of the Lomon Billions Group can send a favorable sign to the market,but the long-term boost effect of the stock price is not obvious,and there is an early disclosure of information before the announcement.The impact of financial effect,for the Lomon Billions Group,the stock repurchase optimized the capital structure,improve the ratio of assets and liabilities,but the financial risk of enterprises increased,debt-servicing capacity decreased,stock repurchase enhanced the company’s operational capacity,but the growth capacity and profitability did not significantly improve.Finally,this paper puts forward policy suggestions for the problems in the stock repurchase cases.