Study On Share Repurchases In Chinese Listed Companies

As an important capital operation method, Share repurchases play more and more important role in the overseas stock market. Not only it may improve capital structure and optimize stockholder's rights structure, moreover it may deliver improved signal of the company management to market so as to stimulate the stock price promotion, and so on. Therefore, share repurchases have been taken much emphasis by relative parts in our stock market. Our scholares have done a great deal of researches on it, but most relevant literatures concentrate on the qualitative analysis, which lack of theoretical and empirical analysis, especially only few empirical conclusion. The primary purpose that listed companies employ it is to solve the major stockholder and the connection side occupied fund, serving the share separation reform, and it is not same as the overseas firm. Hence, it is necessary that we should explore and test share repurchase according to real situation in our stock market in order that enrich existing theories, and direct practice for listed company.This article uses methods, such as comparison research, relevant analysis, regression analysis and event study methodology and so on, and take it as study object such as practice, system, motive, market effect, etc, and the cases appeared resently in our country are investigated systematical comprehensively. At the same time, This article describes the relations between share repurchase and firm value from the point of view of corporation governance, capital structure and dividend policy, and the literatures in domestic and overseas have been reviewed. Furthermore, systematic differences in terms, motive, mode, pricing, fund source have also been explained.The dissertation put forward to related hypothesis according to literatures, and investigates the influenced factors by using regression methodology so as to test motive from empirical viewpoint, and test market effect by using event study in our listed company. The samples are divided different group by which share separation reform is whether or not announced in period, as well as mode, so that the obvious differences are verified among the different group. And the influenced factors of market effect have been investigated by using simple and multiple regression method.The major conclusions and creativities of the dissertation are as follows:Firstly, big differences of the motive have been found by comparing domestic listed company with foreign ones, and there are special motivations of share repurchases in our country, such as to cooperate with the share separation reform and to solve the big shareholder's occupied fund. The motive which the way represents is dissimilar. The signaling hypothesis and the free cash flow hypothesis have certain explanation strength to motive in our country through empirical approach. And the financial flexibility hypothesis and the leverage hypothesis may not explain the motive up to now.Secondly, the announcement of share repurchase has certain market effect in our listed company, but is inconsistent with the overseas practical conclusion. There is positive influence before announcement day, while falling obviously in stock prices after announcement in three days. The possible reason above situation is that the announcement information has been revealed ahead of time. The stock price goes down along with some grasping inside information investor receding.Thirdly, the proportion of major shareholder, mode and growth become the important factors in announcement effect in our company. The relationship of the proportion of major shareholder and growth with cumulative abnormal return represent inverse correlation obviously. Cumulative abnormal return by open market repurchase is less than targeted mode. The announcement of share separate reform is not significant influence to market effect. The proportion of repurchase, book to market value ratio and net assets return have positive relations with cumulative abnormal return, but have not obviously.